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 January ~~23, 2021~~22, 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 February ~~9, 2021~~8, 2022
Common Stock, $1.00 Par Value						~~46,296,693~~43,222,357

Table of Contents

LA-Z-BOY INCORPORATED

FORM 10-Q THIRD QUARTER OF FISCAL ~~2021~~2022

TABLE OF CONTENTS


		Page Number
PART I Financial Information (Unaudited)		3
Item 1.	Financial Statements	3
	Consolidated Statement of Income	3
	Consolidated Statement of Comprehensive Income	4
	Consolidated Balance Sheet	5
	Consolidated Statement of Cash Flows	6
	Consolidated Statement of Changes in Equity	7
	Notes to Consolidated Financial Statements	9
	Note 1. Basis of Presentation	9
	Note 2. Acquisitions	109
	Note 3. Cash and Restricted Cash	1011
	Note 4. Inventories	11
	Note 5. Goodwill and Other Intangible Assets	1112
	Note 6. Investments	12
	Note 7. Accrued Expenses	1314
	Note 8. Product Warranties	1314
	Note 9. ~~Stock-Based Compensation~~Debt	14
	Note 10. ~~Accumulated Other Comprehensive Loss~~Stock-Based Compensation	15
	Note 11. ~~Revenue Recognition~~Accumulated Other Comprehensive Loss	16
	Note 12. ~~Segment Information~~Revenue Recognition	1817
	Note 13. ~~Income Taxes~~Segment Information	19
	Note 14. ~~Earnings per Share~~Income Taxes	1920
	Note 15. Earnings per Share	20
	Note 16. Fair Value Measurements	2021

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2223
	Cautionary Note Regarding Forward-Looking Statements	2223
	Introduction	2223
	Results of Operations	2425
	Liquidity and Capital Resources	30
	Critical Accounting Policies	31
	Recent Accounting Pronouncements	3231

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3231
Item 4.	Controls and Procedures	32

PART II Other Information		33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	33

Signature Page		34

Table of Contents

PART I - FINANCIAL INFORMATION (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF INCOME


		Quarter Ended				Nine Months Ended					Quarter Ended				Nine Months Ended
(Unaudited, amounts in thousands, except per share data)	(Unaudited, amounts in thousands, except per share data)	1/23/21		1/25/20		1/23/21		1/25/20		(Unaudited, amounts in thousands, except per share data)	1/22/2022		1/23/2021		1/22/2022		1/23/2021
Sales	Sales	$	470,196	$	475,856	$	1,214,774	$	1,336,701	Sales	$	571,573	$	470,196	$	1,672,245	$	1,214,774
Cost of sales	Cost of sales	268,944		276,218		696,604		786,962		Cost of sales	352,208		268,944		1,027,503		696,604
Gross profit	Gross profit	201,252		199,638		518,170		549,739		Gross profit	219,365		201,252		644,742		518,170
Selling, general and administrative expense	Selling, general and administrative expense	166,838		147,325		431,492		444,403		Selling, general and administrative expense	179,878		166,838		516,771		431,492
Operating income	Operating income	34,414		52,313		86,678		105,336		Operating income	39,487		34,414		127,971		86,678
Interest expense	Interest expense	(298)		(265)		(1,103)		(891)		Interest expense	(160)		(298)		(713)		(1,103)
Interest income	Interest income	285		844		902		2,093		Interest income	806		285		1,029		902

Other income (expense), net	Other income (expense), net	6,532		(5,998)		7,995		(5,390)		Other income (expense), net	(1,460)		6,532		(522)		7,995
Income before income taxes	Income before income taxes	40,933		46,894		94,472		101,148		Income before income taxes	38,673		40,933		127,765		94,472
Income tax expense	Income tax expense	11,344		12,178		24,900		25,540		Income tax expense	9,591		11,344		33,059		24,900
Net income	Net income	29,589		34,716		69,572		75,608		Net income	29,082		29,589		94,706		69,572
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(357)		(204)		(607)		(434)		Net income attributable to noncontrolling interests	(615)		(357)		(2,157)		(607)
Net income attributable to La-Z-Boy Incorporated	Net income attributable to La-Z-Boy Incorporated	$	29,232	$	34,512	$	68,965	$	75,174	Net income attributable to La-Z-Boy Incorporated	$	28,467	$	29,232	$	92,549	$	68,965

Basic weighted average common shares	Basic weighted average common shares	46,261		46,262		46,064		46,545		Basic weighted average common shares	43,701		46,261		44,342		46,064
Basic net income attributable to La-Z-Boy Incorporated per share	Basic net income attributable to La-Z-Boy Incorporated per share	$	0.63	$	0.75	$	1.50	$	1.61	Basic net income attributable to La-Z-Boy Incorporated per share	$	0.65	$	0.63	$	2.09	$	1.50

Diluted weighted average common shares	Diluted weighted average common shares	46,818		46,584		46,407		46,867		Diluted weighted average common shares	43,968		46,818		44,640		46,407
Diluted net income attributable to La-Z-Boy Incorporated per share	Diluted net income attributable to La-Z-Boy Incorporated per share	$	0.62	$	0.74	$	1.49	$	1.60	Diluted net income attributable to La-Z-Boy Incorporated per share	$	0.65	$	0.62	$	2.07	$	1.49

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

Table of Contents

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


		Quarter Ended				Nine Months Ended					Quarter Ended				Nine Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/23/21		1/25/20		01/23/21		01/25/20		(Unaudited, amounts in thousands)	1/22/2022		1/23/2021		1/22/2022		1/23/2021
Net income	Net income	$	29,589	$	34,716	$	69,572	$	75,608	Net income	$	29,082	$	29,589	$	94,706	$	69,572
Other comprehensive income (loss)	Other comprehensive income (loss)									Other comprehensive income (loss)
Currency translation adjustment	Currency translation adjustment	2,286		(112)		5,751		2,028		Currency translation adjustment	(651)		2,286		(1,902)		5,751
Change in fair value of cash flow hedges, net of tax		0		0		0		10
Net unrealized gain (loss) on marketable securities, net of tax		(14)		16		(37)		170

Net unrealized loss on marketable securities, net of tax										Net unrealized loss on marketable securities, net of tax	(140)		(14)		(190)		(37)
Net pension amortization, net of tax	Net pension amortization, net of tax	65		41		195		123		Net pension amortization, net of tax	56		65		175		195
Total other comprehensive income (loss)	Total other comprehensive income (loss)	2,337		(55)		5,909		2,331		Total other comprehensive income (loss)	(735)		2,337		(1,917)		5,909
Total comprehensive income before allocation to noncontrolling interests	Total comprehensive income before allocation to noncontrolling interests	31,926		34,661		75,481		77,939		Total comprehensive income before allocation to noncontrolling interests	28,347		31,926		92,789		75,481
Comprehensive income attributable to noncontrolling interests	Comprehensive income attributable to noncontrolling interests	(719)		(42)		(1,546)		(1,118)		Comprehensive income attributable to noncontrolling interests	(716)		(719)		(1,708)		(1,546)
Comprehensive income attributable to La-Z-Boy Incorporated	Comprehensive income attributable to La-Z-Boy Incorporated	$	31,207	$	34,619	$	73,935	$	76,821	Comprehensive income attributable to La-Z-Boy Incorporated	$	27,631	$	31,207	$	91,081	$	73,935

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

Table of Contents

LA-Z-BOY INCORPORATED

CONSOLIDATED BALANCE SHEET


(Unaudited, amounts in thousands, except par value)	(Unaudited, amounts in thousands, except par value)	1/23/21		4/25/20		(Unaudited, amounts in thousands, except par value)	1/22/2022		4/24/2021
Current assets	Current assets					Current assets
Cash and equivalents	Cash and equivalents	$	390,324	$	261,553	Cash and equivalents	$	236,712	$	391,213
Restricted cash	Restricted cash	2,703		1,975		Restricted cash	3,266		3,490
Receivables, net of allowance of $5,000 at 1/23/21 and $7,541 at 4/25/20		129,256		99,351
Receivables, net of allowance of $2,996 at 1/22/2022 and $4,011 at 4/24/2021						Receivables, net of allowance of $2,996 at 1/22/2022 and $4,011 at 4/24/2021	163,018		139,341
Inventories, net	Inventories, net	212,114		181,643		Inventories, net	315,595		226,137
Other current assets	Other current assets	153,800		81,804		Other current assets	243,713		165,979
Total current assets	Total current assets	888,197		626,326		Total current assets	962,304		926,160
Property, plant and equipment, net	Property, plant and equipment, net	213,088		214,767		Property, plant and equipment, net	250,945		219,194
Goodwill	Goodwill	175,560		161,017		Goodwill	195,010		175,814
Other intangible assets, net	Other intangible assets, net	30,597		28,653		Other intangible assets, net	34,469		30,431
Deferred income taxes – long-term	Deferred income taxes – long-term	15,635		20,839		Deferred income taxes – long-term	11,685		11,915
Right of use lease assets	Right of use lease assets	337,337		318,647		Right of use lease assets	388,713		343,800
Other long-term assets, net	Other long-term assets, net	79,758		64,640		Other long-term assets, net	86,438		79,008
Total assets	Total assets	$	1,740,172	$	1,434,889	Total assets	$	1,929,564	$	1,786,322

Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	96,388	$	55,511	Accounts payable	$	117,239	$	94,152
Short-term borrowings		0		75,000

Lease liabilities, current	Lease liabilities, current	66,416		64,376		Lease liabilities, current	73,222		67,614
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	388,043		155,282		Accrued expenses and other current liabilities	523,009		449,904
Total current liabilities	Total current liabilities	550,847		350,169		Total current liabilities	713,470		611,670

Lease liabilities, long-term	Lease liabilities, long-term	289,406		270,162		Lease liabilities, long-term	338,478		295,023
Other long-term liabilities	Other long-term liabilities	111,901		98,252		Other long-term liabilities	93,133		97,483
Shareholders' equity	Shareholders' equity					Shareholders' equity
Preferred shares – 5,000 authorized; NaN issued		0		0
Common shares, $1.00 par value – 150,000 authorized; 46,316 outstanding at 1/23/21 and 45,857 outstanding at 4/25/20		46,316		45,857
Preferred shares – 5,000 authorized; none issued						Preferred shares – 5,000 authorized; none issued	—		—
Common shares, $1.00 par value – 150,000 authorized; 43,505 outstanding at 1/22/22 and 45,361 outstanding at 4/24/21						Common shares, $1.00 par value – 150,000 authorized; 43,505 outstanding at 1/22/22 and 45,361 outstanding at 4/24/21	43,505		45,361
Capital in excess of par value	Capital in excess of par value	333,975		318,215		Capital in excess of par value	339,294		330,648
Retained earnings	Retained earnings	401,117		343,633		Retained earnings	395,577		399,010
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,982)		(6,952)		Accumulated other comprehensive loss	(2,989)		(1,521)
Total La-Z-Boy Incorporated shareholders' equity	Total La-Z-Boy Incorporated shareholders' equity	779,426		700,753		Total La-Z-Boy Incorporated shareholders' equity	775,387		773,498
Noncontrolling interests	Noncontrolling interests	8,592		15,553		Noncontrolling interests	9,096		8,648
Total equity	Total equity	788,018		716,306		Total equity	784,483		782,146
Total liabilities and equity	Total liabilities and equity	$	1,740,172	$	1,434,889	Total liabilities and equity	$	1,929,564	$	1,786,322

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

Table of Contents

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS


		Nine Months Ended					Nine Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/23/21		1/25/20		(Unaudited, amounts in thousands)	1/22/2022		1/23/2021
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	69,572	$	75,608	Net income	$	94,706	$	69,572
Adjustments to reconcile net income to cash provided by (used for) operating activities
Adjustments to reconcile net income to cash provided by operating activities						Adjustments to reconcile net income to cash provided by operating activities
(Gain)/loss on disposal of assets	(Gain)/loss on disposal of assets	133		(10,051)		(Gain)/loss on disposal of assets	(3,149)		133
Gain on sale of investments	Gain on sale of investments	(438)		(468)		Gain on sale of investments	(340)		(438)
Change in deferred taxes		5,189		1,238
Provision for doubtful accounts	Provision for doubtful accounts	(2,483)		210		Provision for doubtful accounts	(1,070)		(2,483)
Depreciation and amortization	Depreciation and amortization	24,620		23,035		Depreciation and amortization	27,146		24,620
Amortization of right-of-use lease assets						Amortization of right-of-use lease assets	53,949		48,864
Equity-based compensation expense	Equity-based compensation expense	9,115		7,235		Equity-based compensation expense	8,887		9,115
Change in deferred taxes						Change in deferred taxes	214		5,189

Change in receivables	Change in receivables	(28,720)		(11,178)		Change in receivables	(20,317)		(28,720)
Change in inventories	Change in inventories	(26,419)		(62)		Change in inventories	(83,109)		(26,419)
Change in right-of-use lease assets		48,864		48,972
Change in other assets	Change in other assets	(1,193)		5,116		Change in other assets	(22,486)		(1,193)
Change in payables	Change in payables	42,354		659		Change in payables	23,690		42,354
Change in lease liabilities	Change in lease liabilities	(48,963)		(48,534)		Change in lease liabilities	(54,400)		(48,963)
Change in other liabilities	Change in other liabilities	158,200		27,979		Change in other liabilities	21,471		158,200
Net cash provided by operating activities	Net cash provided by operating activities	249,831		119,759		Net cash provided by operating activities	45,192		249,831

Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Proceeds from disposals of assets	Proceeds from disposals of assets	252		11,242		Proceeds from disposals of assets	3,999		252
Proceeds from insurance		0		1,080

Capital expenditures	Capital expenditures	(26,722)		(35,464)		Capital expenditures	(58,585)		(26,722)
Purchases of investments	Purchases of investments	(27,744)		(26,248)		Purchases of investments	(28,058)		(27,744)
Proceeds from sales of investments	Proceeds from sales of investments	26,317		24,688		Proceeds from sales of investments	30,457		26,317
Acquisitions	Acquisitions	(7,783)		(6,412)		Acquisitions	(24,849)		(2,000)
Net cash used for investing activities	Net cash used for investing activities	(35,680)		(31,114)		Net cash used for investing activities	(77,036)		(29,897)

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities

Payments on debt and finance lease liabilities	Payments on debt and finance lease liabilities	(75,020)		(135)		Payments on debt and finance lease liabilities	(91)		(75,020)
Holdback payments for acquisition purchases						Holdback payments for acquisition purchases	(23,000)		(5,783)
Stock issued for stock and employee benefit plans, net of shares withheld for taxes	Stock issued for stock and employee benefit plans, net of shares withheld for taxes	6,259		828		Stock issued for stock and employee benefit plans, net of shares withheld for taxes	(1,670)		6,259
Purchases of common stock		(875)		(35,346)
Repurchases of common stock						Repurchases of common stock	(75,646)		(875)
Dividends paid to shareholders	Dividends paid to shareholders	(9,700)		(18,641)		Dividends paid to shareholders	(20,621)		(9,700)
Dividends paid to minority interest joint venture partners (1)	Dividends paid to minority interest joint venture partners (1)	(8,507)		0		Dividends paid to minority interest joint venture partners (1)	(1,260)		(8,507)
Net cash used for financing activities	Net cash used for financing activities	(87,843)		(53,294)		Net cash used for financing activities	(122,288)		(93,626)

Effect of exchange rate changes on cash and equivalents	Effect of exchange rate changes on cash and equivalents	3,191		1,107		Effect of exchange rate changes on cash and equivalents	(593)		3,191
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	129,499		36,458		Change in cash, cash equivalents and restricted cash	(154,725)		129,499
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	263,528		131,787		Cash, cash equivalents and restricted cash at beginning of period	394,703		263,528
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	393,027	$	168,245	Cash, cash equivalents and restricted cash at end of period	$	239,978	$	393,027

Supplemental disclosure of non-cash investing activities	Supplemental disclosure of non-cash investing activities					Supplemental disclosure of non-cash investing activities
Capital expenditures included in payables	Capital expenditures included in payables	$	1,569	$	4,026	Capital expenditures included in payables	$	4,564	$	1,569

(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.

Table of Contents

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 Income
(Loss) Non-Controlling
Interests Total
At April 25, 2020 $ 45,857 $ 318,215 $ 343,633 $ (6,952) $ 15,553 $ 716,306
Net income (loss) — — 4,798 — (119) 4,679
Other comprehensive income — — — 1,720 498 2,218
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 132 (195) (1,686) — — (1,749)
Stock option and restricted stock expense — 2,047 — — — 2,047
Dividends declared and paid (1) — — 5 — (8,507) (8,502)
At July 25, 2020 $ 45,989 $ 320,067 $ 346,750 $ (5,232) $ 7,425 $ 714,999
Net income — — 34,935 — 369 35,304
Other comprehensive income — — — 1,275 79 1,354
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 124 1,995 (6) — — 2,113
Stock option and restricted stock expense — 4,120 — — — 4,120
Dividends declared and paid ($0.07/share) — — (3,221) — — (3,221)
Dividends declared not paid ($0.07/share) — — (20) — — (20)
At October 24, 2020 $ 46,113 $ 326,182 $ 378,438 $ (3,957) $ 7,873 $ 754,649
Net income — — 29,232 — 357 29,589
Other comprehensive income — — — 1,975 362 2,337
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 225 5,698 (28) — — 5,895
Purchases of 22 shares of common stock (22) (853) — — — (875)
Stock option and restricted stock expense — 2,948 — — — 2,948
Dividends declared and paid ($0.14/share) — — (6,484) — — (6,484)
Dividends declared not paid ($0.14/share) — — (41) — — (41)
At January 23, 2021 $ 46,316 $ 333,975 $ 401,117 $ (1,982) $ 8,592 $ 788,018


(Unaudited, amounts in thousands)	Common Shares		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Non-Controlling Interests		Total
At April 24, 2021	$	45,361	$	330,648	$	399,010	$	(1,521)	$	8,648	$	782,146
Net income	—		—		24,566		—		700		25,266
Other comprehensive loss	—		—		—		(302)		(430)		(732)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	181		291		(2,700)		—		—		(2,228)
Repurchases of 919 shares of common stock	(919)		(530)		(34,191)		—		—		(35,640)
Stock option and restricted stock expense	—		2,460		—		—		—		2,460
Dividends declared and paid ($0.15/share)	—		—		(6,777)		—		—		(6,777)
Dividends declared not paid ($0.15/share)	—		—		(46)		—		—		(46)
At July 24, 2021	$	44,623	$	332,869	$	379,862	$	(1,823)	$	8,918	$	764,449
Net income	—		—		39,516		—		842		40,358
Other comprehensive loss	—		—		—		(330)		(120)		(450)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	11		353		(6)		—		—		358
Repurchases of 434 shares of common stock	(434)		(196)		(14,370)		—		—		(15,000)
Stock option and restricted stock expense	—		3,894		—		—		—		3,894


Dividends declared and paid ($0.15/share) (1)	—		—		(6,621)		—		(1,260)		(7,881)
Dividends declared not paid ($0.15/share)	—		—		(46)		—		—		(46)
At October 23, 2021	$	44,200	$	336,920	$	398,335	$	(2,153)	$	8,380	$	785,682
Net income	—		—		28,467		—		615		29,082
Other comprehensive income (loss)	—		—		—		(836)		101		(735)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	8		204		(12)		—		—		200
Repurchases of 703 shares of common stock	(703)		(363)		(23,940)		—		—		(25,006)
Stock option and restricted stock expense	—		2,533				—		—		2,533


Dividends declared and paid ($0.165/share)	—		—		(7,223)		—		—		(7,223)
Dividends declared not paid ($0.165/share)	—		—		(50)		—		—		(50)
At January 22, 2022	$	43,505	$	339,294	$	395,577	$	(2,989)	$	9,096	$	784,483

(1)~~NaN~~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.

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

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

At July 25, 2020	$	45,989	$	320,067	$	346,750	$	(5,232)	$	7,425	$	714,999
Net income	—		—		34,935		—		369		35,304
Other comprehensive income	—		—		—		1,275		79		1,354
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	124		1,995		(6)		—		—		2,113

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

Dividends declared and paid ($0.07/share)	—		—		(3,221)		—		—		(3,221)
Dividends declared not paid ($0.07/share)	—		—		(20)		—		—		(20)
At October 24, 2020	$	46,113	$	326,182	$	378,438	$	(3,957)	$	7,873	$	754,649
Net income	—		—		29,232		—		357		29,589
Other comprehensive income	—		—		—		1,975		362		2,337
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	225		5,698		(28)		—		—		5,895
Purchases of 22 shares of common stock	(22)		(853)		—		—		—		(875)
Stock option and restricted stock expense	—		2,948		—		—		—		2,948

Dividends declared and paid ($0.14/share)	—		—		(6,484)		—		—		(6,484)
Dividends declared not paid ($0.14/share)	—		—		(41)		—		—		(41)
At January 23, 2021	$	46,316	$	333,975	$	401,117	$	(1,982)	$	8,592	$	788,018

(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.

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(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 27, 2019 $ 46,955 $ 313,168 $ 325,847 $ (3,462) $ 14,468 $ 696,976
Net income (loss) — — 18,069 — (81) 17,988
Other comprehensive income — — — 281 486 767
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 126 126 (1,669) — — (1,417)
Repurchases of 391 shares of common stock (391) (3,762) (8,160) — — (12,313)
Stock option and restricted stock expense — 1,675 — — — 1,675
Cumulative effect adjustment for leases, net of tax (1) — — 574 — — 574
Reclassification of certain income tax effects (2) — — 547 (547) — 0
Dividends declared and paid ($0.13/share) — — (6,112) — — (6,112)
At July 27, 2019 $ 46,690 $ 311,207 $ 329,096 $ (3,728) $ 14,873 $ 698,138
Net income — — 22,593 — 311 22,904
Other comprehensive income — — — 1,260 359 1,619
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 84 1,908 (4) — — 1,988
Purchases of 335 shares of common stock (335) (1,908) (8,611) — — (10,854)
Stock option and restricted stock expense — 3,032 — — — 3,032
Dividends declared and paid ($0.13/share) — — (6,039) — — (6,039)
Dividends declared not paid ($0.13/share) — — (46) — — (46)
At October 26, 2019 $ 46,439 $ 314,239 $ 336,989 $ (2,468) $ 15,543 $ 710,742
Net income — — 34,512 — 204 34,716
Other comprehensive income (loss) — — — 107 (162) (55)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 14 281 (37) — — 258
Purchases of 378 shares of common stock (378) (284) (11,520) — — (12,182)
Stock option and restricted stock expense — 2,528 — — — 2,528
Cumulative effect adjustment for investments, net of tax — — — — — —
Dividends declared and paid ($0.14/share) — — (6,490) — — (6,490)
Dividends declared not paid ($0.14/share) — — (35) — — (35)
At January 25, 2020 $ 46,075 $ 316,764 $ 353,419 $ (2,361) $ 15,585 $ 729,482

~~(1)Cumulative effect adjustment of deferred gains on prior sale/leaseback transactions as a result of adopting~~ ~~ASU 2016-02~~.

~~(2)Income tax effects of the Tax Cuts and Jobs Act are reclassified from Accumulated Other Comprehensive Income ("AOCI") to retained earnings due to the adoption of ASU 2018-02.~~

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 ~~25, 2020,~~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 ~~2020~~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 ~~24, 2021.~~30, 2022.

At January ~~23, 2021,~~22, 2022, we owned preferred shares and warrants to purchase common shares of 2 ~~privately held~~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.

~~COVID-19~~

As part of our continued response to the impact of COVID-19, on June 4, 2020, we announced our business realignment plan, which included the reduction of the Company's global workforce by approximately 10% across our manufacturing, retail and corporate locations, including the closure of our Newton, Mississippi upholstery manufacturing facility. In the first nine months of fiscal 2021, we incurred expenses of $3.9 million associated with our business realignment plan, primarily due to severance costs and an impairment of the carrying value of the Newton manufacturing facility. Subsequent to the announcement of our business realignment plan in the first quarter of fiscal 2021, consumers have continued to allocate more discretionary spending to home furnishings and as a result, the demand for our products has outpaced our production capacity. In response, we have added manufacturing cells at our Mexico Cut-and-Sew Center, added weekend production shifts to our U.S plants, temporarily re-activated a portion of our Newton, Mississippi upholstery manufacturing facility, and have opened a leased upholstery plant, in San Luis Rio Colorado, Mexico.

During the fourth quarter of fiscal 2020, in response to economic conditions resulting from COVID-19, to strengthen our financial position and maintain liquidity, we proactively borrowed $75.0 million from our revolving credit facility. Given the positive trends in cash flows during the first six months of fiscal 2021, we repaid all of the $75.0 million borrowed under our line of credit in the first and second quarters of fiscal 2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The CARES Act, among other things, includes provisions providing for refundable payroll tax credits, deferment of employer social security payments, lengthening net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In the third quarter of fiscal 2021, the Company determined amounts that it is eligible to claim for employee retention payroll tax credits and recognized $5.2 million in non-operating income for wages and healthcare costs paid to employees during suspension of operations due to government orders which qualify under the provisions of the CARES Act. The Company continues to evaluate the impact that the CARES Act may have on its results of operations, financial condition and/or financial statement disclosures.

~~We continue to actively manage the impact of the COVID-19 crisis and there is uncertainty regarding the impact COVID-19 will have on our financial operations in the near and long term.~~

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Accounting pronouncements adopted in fiscal ~~2021~~2022

The following table summarizes Accounting Standards Updates ("ASUs") which were adopted in fiscal ~~2021,~~2022, but did not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.


ASU						Description
ASU ~~2016-13~~2018-14						~~Financial Instruments~~Compensation – ~~Credit losses (Topic 326)~~Retirement benefits – Defined Benefit Plans – General (Subtopic 715-20): ~~Measurement of Credit Losses on Financial Instruments~~Changes to the Disclosure Requirements for Defined Benefit Plans
ASU ~~2020-04~~2019-12						~~Reference Rate Reform~~Income Taxes (Topic ~~848)~~740): ~~Facilitation of~~Simplifying the ~~Effects of Reference Rate Reform on Financial Reporting~~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
ASU 2021-10						Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance

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 ~~2018-14~~2021-08

~~Compensation – Retirement benefits – Defined Benefit Plans – General (Subtopic 715-20)~~Business Combinations (Topic 805): ~~Changes to the Disclosure Requirements~~Accounting for ~~Defined Benefit Plans~~Contract Assets and Contract Liabilities From Contracts With Customers

Fiscal ~~2022~~

~~ASU 2019-12~~

~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~

~~Fiscal 2022~~

~~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

~~Fiscal 2022~~2024

Note 2: Acquisitions

Alabama and Chattanooga, Tennessee acquisition

On December 6, 2021, we completed our acquisition of the Alabama and Chattanooga, Tennessee businesses that operate 4 independently owned La-Z-Boy Furniture Galleries® stores in Alabama and 1 in Chattanooga, Tennessee, for $8.3 million, subject to customary purchase price adjustments. In the third quarter of fiscal 2022, we paid $8.0 million of cash for the purchase of the Alabama and Chattanooga, Tennessee stores and assets. 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.

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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 $4.1 million related to these reacquired rights. We also recognized $7.4 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 Alabama and Chattanooga, Tennessee businesses 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.

Furnico (La-Z-Boy United Kingdom Manufacturing) acquisition

On October 25, 2021, we completed the acquisition of Furnico Furniture Ltd ("Furnico"), an upholstery manufacturing business in the U.K for approximately $11.8 million, subject to customary purchase price adjustments and in the third quarter of fiscal 2022, we paid $12.4 million of cash for the purchase of the Furnico business. Furnico produces La-Z-Boy branded product for the La-Z-Boy U.K. business and 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 to support growth in the La-Z-Boy U.K business.

We recognized $7.9 million of goodwill in our Wholesale segment related primarily to synergies we expect from the integration of the acquired business and future benefits of these synergies. The goodwill asset for Furnico is not deductible for federal income tax purposes.

The acquisition of the Furnico 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 following the acquisition as we gain additional data.

Long Island, New York acquisition

On August 16, 2021, we completed our acquisition of the Long Island, New York business that operates 3 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 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.

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 following the acquisition as we gain additional data.

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Prior Year Acquisitions

On September 14, 2020, we completed our ~~asset~~ acquisition of the Seattle, Washington business that ~~operated~~operates 6 independently owned La-Z-Boy Furniture Galleries® stores and 1 warehouse for $13.5 million, subject to customary purchase price 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 ~~less,~~fewer, with timing of payments dependent upon the achievement of sales thresholds defined in the purchase agreement. This acquisition isreflects a core ~~part~~component of our ~~strategy~~strategic priorities, which is to grow our company-owned retail business and leverage our integrated retail model ~~where~~(where we earn a combined profit on both the wholesale and retail ~~sales.~~sales) in suitable geographic markets, alongside the existing 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. ~~All~~

Comparability

During fiscal 2021, we determined that holdback payments for acquisition purchases of ~~our provisional purchase accounting estimates~~$5.8 million included in net cash used by investing activities should have been included in net cash used by financing activities for ~~this acquisition are based on~~ the ~~information and data available~~first nine months of fiscal 2021. Although the amount impacting payments for acquisitions was not material to ~~us as of~~ the ~~time of~~fiscal 2021 consolidated financial statements, the ~~issuance~~classification of these ~~financial~~amounts has been corrected by revising the consolidated statements ~~and in accordance with Accounting Standard Codification Topic 805-10-25-15, are subject to change within~~of cash flows for the ~~first 12~~nine months ~~of acquisition as we have access to additional data.~~ended January 23, 2021.

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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)	(Unaudited, amounts in thousands)	1/23/21		1/25/20		(Unaudited, amounts in thousands)	1/22/2022		1/23/2021
Cash and cash equivalents	Cash and cash equivalents	$	390,324	$	166,272	Cash and cash equivalents	$	236,712	$	390,324
Restricted cash	Restricted cash	2,703		1,973		Restricted cash	3,266		2,703
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	393,027	$	168,245	Total cash, cash equivalents and restricted cash	$	239,978	$	393,027

Note 4: Inventories

A summary of inventories is as follows:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/23/21		4/25/20		(Unaudited, amounts in thousands)	1/22/2022		4/24/2021
Raw materials	Raw materials	$	110,743	$	92,174	Raw materials	$	175,372	$	112,371
Work in process	Work in process	20,839		14,064		Work in process	40,243		24,791
Finished goods	Finished goods	101,977		96,850		Finished goods	150,186		121,182
FIFO inventories	FIFO inventories	233,559		203,088		FIFO inventories	365,801		258,344
Excess of FIFO over LIFO	Excess of FIFO over LIFO	(21,445)		(21,445)		Excess of FIFO over LIFO	(50,206)		(32,207)
Total inventories(1)	Total inventories(1)	$	212,114	$	181,643	Total inventories(1)	$	315,595	$	226,137

(1)Increased balance to ensure input material availability to support increased sales demand and manufacturing capacity

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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 ~~is a roll-forward~~table summarizes changes in the carrying amount of our goodwill ~~for the nine months ended January 23, 2021:~~by reportable segment:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Wholesale Segment		Retail Segment		Corporate and Other		Total Goodwill		(Unaudited, amounts in thousands)	Wholesale Segment		Retail Segment		Corporate and Other		Total Goodwill
Balance at April 25, 2020		$	11,630	$	93,941	$	55,446	$	161,017
Balance at April 24, 2021										Balance at April 24, 2021	$	13,052	$	107,316	$	55,446	$	175,814
Acquisitions	Acquisitions	0		12,936		0		12,936		Acquisitions	7,926		11,748		—		19,674
Translation adjustment	Translation adjustment	1,245		362		0		1,607		Translation adjustment	(445)		(33)		—		(478)
Balance at January 23, 2021		$	12,875	$	107,239	$	55,446	$	175,560
Balance at January 22, 2022										Balance at January 22, 2022	$	20,533	$	119,031	$	55,446	$	195,010

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 ~~is a roll-forward of~~summarizes changes in our ~~other~~ intangible ~~assets for the nine months ended January 23, 2021:~~assets:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Indefinite- Lived Trade Names		Finite- Lived Trade Name		Indefinite- Lived Reacquired Rights		Other Intangible Assets		Total Other 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 25, 2020		$	1,155	$	5,003	$	19,996	$	2,499	$	28,653
Balance at April 24, 2021												Balance at April 24, 2021	$	1,155	$	4,205	$	22,507	$	2,564	$	30,431
Acquisitions	Acquisitions	0		0		2,182		0		2,182		Acquisitions	—		—		4,896		—		4,896
Amortization	Amortization	0		(599)		0		(168)		(767)		Amortization	—		(599)		—		(178)		(777)
Translation adjustment	Translation adjustment	0		0		271		258		529		Translation adjustment	—		—		(25)		(56)		(81)
Balance at January 23, 2021		$	1,155	$	4,404	$	22,449	$	2,589	$	30,597
Balance at January 22, 2022												Balance at January 22, 2022	$	1,155	$	3,606	$	27,378	$	2,330	$	34,469

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

Note 6: Investments

We have current and long-term investments intended to enhance returns on our cash as well as to fund future obligations of our non-qualified defined benefit retirement plan, our executive deferred compensation plan, and our performance compensation retirement plan. We also hold other investments consisting of cost-basis preferred shares of 2 ~~privately held~~privately-held start-up ~~companies.~~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.

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The following summarizes our investments:

(Unaudited, amounts in thousands) 1/23/21 4/25/20
Short-term investments:
Marketable securities $ 17,586 $ 18,634
Held-to-maturity investments 2,643 3,337
Total short-term investments 20,229 21,971
Long-term investments:
Marketable securities 25,243 19,572
Cost basis investments 7,579 6,479
Total long-term investments 32,822 26,051
Total investments $ 53,051 $ 48,022
Investments to enhance returns on cash $ 30,553 $ 28,622
Investments to fund compensation/retirement plans 14,919 12,921
Other investments 7,579 6,479
Total investments $ 53,051 $ 48,022


(Unaudited, amounts in thousands)	1/22/2022		4/24/2021
Short-term investments:
Marketable securities	$	14,835	$	18,037
Held-to-maturity investments	1,391		2,532
Total short-term investments	16,226		20,569
Long-term investments:
Marketable securities	28,864		27,256
Cost basis investments	7,579		7,579
Total long-term investments	36,443		34,835
Total investments	$	52,669	$	55,404

Investments to enhance returns on cash	$	29,754	$	32,475
Investments to fund compensation/retirement plans	15,336		15,350
Other investments	7,579		7,579
Total investments	$	52,669	$	55,404

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

1/23/21 4/25/20
(Unaudited, amounts in thousands) Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value
Equity securities $ 2,671 $ 0 $ 15,492 $ 1,011 $ (6,390) $ 12,692
Fixed income 182 (19) 32,932 268 (56) 30,213
Other 604 0 4,627 372 0 5,117
Total securities $ 3,457 $ (19) $ 53,051 $ 1,651 $ (6,446) $ 48,022


	1/22/2022						4/24/2021
(Unaudited, amounts in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Equity securities	$	2,004	$	(55)	$	14,535	$	2,798	$	(5)	$	14,954
Fixed income	92		(204)		33,780		136		(29)		35,631
Other	1,290		—		4,354		559		—		4,819
Total securities	$	3,386	$	(259)	$	52,669	$	3,493	$	(34)	$	55,404

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The following table summarizes sales of marketable securities:

Quarter Ended Nine Months Ended
(Unaudited, amounts in thousands) 1/23/21 1/25/20 1/23/21 1/25/20
Proceeds from sales $ 6,807 $ 11,517 $ 23,824 $ 23,887
Gross realized gains 169 431 479 618
Gross realized losses (15) (62) (41) (150)


	Quarter Ended				Nine Months Ended
(Unaudited, amounts in thousands)	1/22/2022		1/23/2021		1/22/2022		1/23/2021
Proceeds from sales	$	7,784	$	6,807	$	29,437	$	23,824
Gross realized gains	142		169		696		479
Gross realized losses	(20)		(15)		(356)		(41)

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)	1/~~23/21~~22/2022
Within one year	$	~~17,678~~14,832
Within two to five years	~~12,472~~16,341
Within six to ten years	~~1,114~~967
Thereafter	~~1,668~~1,640
Total	$	~~32,932~~33,780

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Note 7: Accrued Expenses and Other Current Liabilities

(Unaudited, amounts in thousands) 1/23/21 4/25/20
Payroll and other compensation $ 48,403 $ 34,980
Accrued product warranty, current portion 14,322 14,264
Customer deposits 162,576 40,721
Deferred revenue 93,914 17,086
Other current liabilities 68,828 48,231
Accrued expenses and other current liabilities $ 388,043 $ 155,282

The increase in customer deposits and deferred revenue was primarily driven by higher Retail segment and Joybird written sales in the first nine months of fiscal 2021. Higher written sales also led to an increase in contract assets, which are included in other current assets on the consolidated balance sheet, consistent with the increase in deferred revenue. Refer to Note 11, Revenue Recognition, for additional details regarding our contract assets and contract liabilities.


(Unaudited, amounts in thousands)	1/22/2022		4/24/2021
Payroll and other compensation	$	56,182	$	62,546
Accrued product warranty, current portion	15,848		14,447
Customer deposits	199,874		180,766
Deferred revenue	151,698		108,460
Other current liabilities	99,407		83,685
Accrued expenses and other current liabilities	$	523,009	$	449,904

Note 8: Product Warranties

We accrue an estimated liability for product warranties when we recognize revenue on the sale of ~~warranted~~warrantied products. We estimate future warranty claims on ~~new~~product sales based on our historical claims experience and ~~any additional anticipated future costs on previously sold products.~~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 of 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.

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

Quarter Ended Nine Months Ended
(Unaudited, amounts in thousands) 1/23/21 1/25/20 01/23/21 01/25/20
Balance as of the beginning of the period $ 22,938 $ 23,081 $ 23,255 $ 22,736
Accruals during the period 5,791 6,321 14,925 17,746
Settlements during the period (5,734) (6,057) (15,185) (17,137)
Balance as of the end of the period (1)
$ 22,995 $ 23,345 $ 22,995 $ 23,345


	Quarter Ended				Nine Months Ended
(Unaudited, amounts in thousands)	1/22/2022		1/23/2021		1/22/2022 (1)		1/23/2021
Balance as of the beginning of the period	$	25,068	$	22,938	$	23,636	$	23,255
Acquisitions	634		—		634		—
Accruals during the period	7,271		5,791		21,158		14,925
Settlements during the period	(6,612)		(5,734)		(19,067)		(15,185)
Balance as of the end of the period	$	26,361	$	22,995	$	26,361	$	22,995

(1)$~~14.3~~15.8 million and $14.4 million is recorded in accrued expenses and other current liabilities ~~at both~~as of January ~~23, 2021~~22, 2022 and April ~~25, 2020,~~24, 2021, respectively, while the remainder is in included in other long-term liabilities.

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

Note 9: Debt

On 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 the satisfaction of customary conditions. As of January 22, 2022, we have 0 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 certain assets. As of January 22, 2022, we were in compliance with our financial covenants under the Credit Facility.

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The Credit Facility replaced 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.

Note 9:10: 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				Nine Months Ended					Quarter Ended				Nine Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/23/21		1/25/20		01/23/21		01/25/20		(Unaudited, amounts in thousands)	1/22/2022		1/23/2021		1/22/2022		1/23/2021
Equity-based awards expense	Equity-based awards expense	$	2,948	$	2,528	$	9,115	$	7,235	Equity-based awards expense	$	2,533	$	2,948	$	8,887	$	9,115
Liability-based awards expense(1)	Liability-based awards expense(1)	587		(303)		1,925		37		Liability-based awards expense(1)	(73)		587		(696)		1,925
Total stock-based compensation expense	Total stock-based compensation expense	$	3,535	$	2,225	$	11,040	$	7,272	Total stock-based compensation expense	$	2,460	$	3,535	$	8,191	$	11,040

(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 ~~315,584~~252,996 stock options to employees during the first quarter of fiscal ~~2021~~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 ~~2021~~2022 was calculated using the following assumptions:

(Unaudited)

Fiscal ~~2021~~2022 grant

Assumption

Risk-free interest rate

~~0.34~~0.82

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

Dividend rate

01.58

Estimated future dividend rate and common share price at grant date

Expected life

55.0 years

Contractual term of stock option and expected employee exercise trends

Stock price volatility

~~41.79~~42.16

Historical volatility of our common shares

Fair value per ~~share~~option

~~10.06~~12.29

Restricted Stock. We granted ~~121,385~~121,963 shares of restricted stock to employees during the first nine months of fiscal ~~2021. We also have shares of restricted stock outstanding from previous grants.~~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~~recipient's employment ends during the escrow period (other than ~~as a result of~~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 nine months of fiscal ~~2021~~2022 was ~~$27.63~~$38.27 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 ~~grant~~ date ofour Compensation Committee approved the ~~award.~~awards. Restricted stock awards vest at 25% per year, beginning one year from the grant date over a term of four years.

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Restricted Stock ~~Units.~~ Units. During the ~~second quarter~~first nine months of fiscal ~~2021,~~2022, we granted ~~26,192~~33,794 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~~grant. The weighted-average fair value of the restricted stock units that were awarded in the first nine months of fiscal 2022 was ~~$32.08.~~$35.34 per share.

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Performance Shares. During the first quarter of fiscal ~~2021,~~2022, we granted ~~168,719~~125,021 performance-based shares. We also have performance-based share awards outstanding from previous grants. Payout of the fiscal ~~2021~~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 ~~2019 and~~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 consistent with those in the fiscal 2021 grant.~~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 ~~2021~~2022 that vest based on attaining performance goals was ~~$30.75,~~$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 ~~2021~~2022 grant of shares that vest based on market conditions was ~~$38.14.~~$51.85.

Note ~~10:~~11: Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the quarters ended January ~~23, 2021,~~22, 2022, and January ~~25, 2020,~~23, 2021, is as follows:

(Unaudited, amounts in thousands) Translation adjustment Change in fair value of cash flow hedge Unrealized gain (loss) on marketable securities Net pension amortization and net actuarial loss Accumulated other comprehensive income (loss)
Balance at October 24, 2020 $ 997 $ 0 $ 426 $ (5,380) $ (3,957)
Changes before reclassifications 1,924 0 (27) 0 1,897
Amounts reclassified to net income 0 0 9 86 95
Tax effect 0 0 4 (21) (17)
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated 1,924 0 (14) 65 1,975
Balance at January 23, 2021 $ 2,921 $ 0 $ 412 $ (5,315) $ (1,982)
Balance at October 26, 2019 $ 1,345 $ 0 $ 418 $ (4,231) $ (2,468)
Changes before reclassifications 50 0 41 0 91
Amounts reclassified to net income 0 0 (20) 55 35
Tax effect 0 0 (5) (14) (19)
Other comprehensive income attributable to La-Z-Boy Incorporated 50 0 16 41 107
Balance at January 25, 2020 $ 1,395 $ 0 $ 434 $ (4,190) $ (2,361)


(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 October 23, 2021	$	2,340	$	320	$	(4,813)	$	(2,153)
Changes before reclassifications	(752)		(201)		—		(953)


Amounts reclassified to net income	—		16		75		91
Tax effect	—		45		(19)		26
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(752)		(140)		56		(836)
Balance at January 22, 2022	$	1,588	$	180	$	(4,757)	$	(2,989)

Balance at October 24, 2020	$	997	$	426	$	(5,380)	$	(3,957)
Changes before reclassifications	1,924		(27)		—		1,897


Amounts reclassified to net income	—		9		86		95
Tax effect	—		4		(21)		(17)
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	1,924		(14)		65		1,975
Balance at January 23, 2021	$	2,921	$	412	$	(5,315)	$	(1,982)

1516

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The activity in accumulated other comprehensive income (loss) for the nine months ended January ~~23, 2021,~~22, 2022 and January ~~25, 2020,~~23, 2021, is as follows:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Translation adjustment		Change in fair value of cash flow hedge		Unrealized gain (loss) on marketable securities		Net pension amortization and net actuarial loss		Accumulated other comprehensive income (loss)		(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												Balance at April 24, 2021	$	3,041	$	370	$	(4,932)	$	(1,521)
Changes before reclassifications												Changes before reclassifications	(1,453)		(270)		—		(1,723)

Amounts reclassified to net income												Amounts reclassified to net income	—		18		225		243
Tax effect												Tax effect	—		62		(50)		12
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated												Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(1,453)		(190)		175		(1,468)
Balance at January 22, 2022												Balance at January 22, 2022	$	1,588	$	180	$	(4,757)	$	(2,989)

Balance at April 25, 2020	Balance at April 25, 2020	$	(1,891)	$	0	$	449	$	(5,510)	$	(6,952)	Balance at April 25, 2020	$	(1,891)	$	449	$	(5,510)	$	(6,952)
Changes before reclassifications	Changes before reclassifications	4,812		0		(11)		0		4,801		Changes before reclassifications	4,812		(11)		—		4,801

Amounts reclassified to net income	Amounts reclassified to net income	0		0		(38)		259		221		Amounts reclassified to net income	—		(38)		259		221
Tax effect	Tax effect	0		0		12		(64)		(52)		Tax effect	—		12		(64)		(52)
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	4,812		0		(37)		195		4,970		Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	4,812		(37)		195		4,970
Balance at January 23, 2021	Balance at January 23, 2021	$	2,921	$	0	$	412	$	(5,315)	$	(1,982)	Balance at January 23, 2021	$	2,921	$	412	$	(5,315)	$	(1,982)

Balance at April 27, 2019		$	50	$	87	$	6	$	(3,605)	$	(3,462)
Changes before reclassifications		1,345		0		253		0		1,598
Reclassification of certain income tax effects (1)		0		(97)		258		(708)		(547)

Amounts reclassified to net income		0		14		(28)		164		150
Tax effect		0		(4)		(55)		(41)		(100)
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated		1,345		(87)		428		(585)		1,101
Balance at January 25, 2020		$	1,395	$	0	$	434	$	(4,190)	$	(2,361)

~~(1)Income tax effects of the Tax Cuts and Jobs Act are reclassified from AOCI to retained earnings due to adoption of ASU 2018-02.~~

We reclassified both the unrealized ~~gain/~~gain (loss) on marketable securities and the net pension amortization from accumulated other comprehensive loss ~~to net income through other income (expense), net, reclassified the change in fair value of cash flow hedges to net income through cost of sales, and reclassified the net pension amortization~~ to net income through other income (expense), net.

The components of non-controlling interest were as follows:


		Quarter Ended				Nine Months Ended					Quarter Ended				Nine Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/23/21		1/25/20		1/23/21		1/25/20		(Unaudited, amounts in thousands)	1/22/2022		1/23/2021		1/22/2022		1/23/2021
Balance as of the beginning of the period	Balance as of the beginning of the period	$	7,873	$	15,543	$	15,553	$	14,468	Balance as of the beginning of the period	$	8,380	$	7,873	$	8,648	$	15,553
Net income	Net income	357		204		607		434		Net income	615		357		2,157		607
Other comprehensive income (loss)	Other comprehensive income (loss)	362		(162)		939		683		Other comprehensive income (loss)	101		362		(449)		939
Dividends distributed to joint venture minority partners	Dividends distributed to joint venture minority partners	0		0		(8,507)		0		Dividends distributed to joint venture minority partners	—		—		(1,260)		(8,507)
Balance as of the end of the period	Balance as of the end of the period	$	8,592	$	15,585	$	8,592	$	15,585	Balance as of the end of the period	$	9,096	$	8,592	$	9,096	$	8,592

Note ~~11:~~12: Revenue Recognition

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

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

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

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

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

Quarter Ended January 23, 2021 Quarter Ended January 25, 2020
(Unaudited, amounts in thousands) Wholesale Retail Corporate
and Other Total Wholesale Retail Corporate
and Other Total
Motion Upholstery Furniture $ 205,522 $ 102,111 $ 174 $ 307,807 $ 212,079 $ 100,662 $ 104 $ 312,845
Stationary Upholstery Furniture 89,059 30,469 35,728 155,256 100,560 33,348 28,990 162,898
Bedroom Furniture 10,269 1,723 2,622 14,614 7,772 1,517 1,842 11,131
Dining Room Furniture 7,034 3,340 672 11,046 5,981 3,040 596 9,617
Occasional Furniture 11,585 6,118 623 18,326 12,002 6,148 516 18,666
Other (1) 27,239 22,198 (6,128) 43,309 26,417 22,779 (6,379) 42,817
Total $ 350,708 $ 165,959 $ 33,691 $ 550,358 $ 364,811 $ 167,494 $ 25,669 $ 557,974
Eliminations (80,162) (82,118)
Consolidated Net Sales $ 470,196 $ 475,856
Nine Months Ended January 23, 2021 Nine Months Ended January 25, 2020
(Unaudited, amounts in thousands) Wholesale Retail Corporate
and Other Total Wholesale Retail Corporate
and Other Total
Motion Upholstery Furniture $ 538,234 $ 255,020 $ 397 $ 793,651 $ 588,820 $ 270,301 $ 264 $ 859,385
Stationary Upholstery Furniture 240,052 79,104 88,225 407,381 294,572 96,306 79,213 470,091
Bedroom Furniture 25,818 4,141 6,149 36,108 24,711 4,513 4,800 34,024
Dining Room Furniture 18,455 7,957 2,173 28,585 17,656 8,036 1,436 27,128
Occasional Furniture 32,236 14,879 2,158 49,273 35,071 16,728 1,374 53,173
Other (1) 62,502 58,270 (14,953) 105,819 74,777 63,010 (16,555) 121,232
Total $ 917,297 $ 419,371 $ 84,149 $ 1,420,817 $ 1,035,607 $ 458,894 $ 70,532 $ 1,565,033
Eliminations (206,043) (228,332)
Consolidated Net Sales $ 1,214,774 $ 1,336,701


	Quarter Ended January 22, 2022								Quarter Ended January 23, 2021
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture	$	238,119	$	113,767	$	288	$	352,174	$	205,522	$	102,111	$	174	$	307,807
Stationary Upholstery Furniture	94,216		46,938		55,971		197,125		89,059		30,469		35,728		155,256
Bedroom Furniture	6,723		1,598		3,674		11,995		10,269		1,723		2,622		14,614
Dining Room Furniture	5,562		2,802		1,063		9,427		7,034		3,340		672		11,046
Occasional Furniture	7,396		6,672		1,153		15,221		11,585		6,118		623		18,326
Delivery	45,168		6,342		2,097		53,607		30,021		6,081		1,394		37,496
Other (1)	26,097		18,933		(14,267)		30,763		(2,782)		16,117		(7,522)		5,813
Total	$	423,281	$	197,052	$	49,979	$	670,312	$	350,708	$	165,959	$	33,691	$	550,358

Eliminations							(98,739)								(80,162)
Consolidated Net Sales							$	571,573							$	470,196

	Nine Months Ended January 22, 2022								Nine Months Ended January 23, 2021
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture	$	699,433	$	326,251	$	538	$	1,026,222	$	538,234	$	255,020	$	397	$	793,651
Stationary Upholstery Furniture	284,318		133,449		153,590		571,357		240,052		79,104		88,225		407,381
Bedroom Furniture	30,030		5,386		10,524		45,940		25,818		4,141		6,149		36,108
Dining Room Furniture	20,941		9,462		3,270		33,673		18,455		7,957		2,173		28,585
Occasional Furniture	31,746		19,659		2,966		54,371		32,236		14,879		2,158		49,273
Delivery	128,318		20,007		5,629		153,954		80,596		15,116		3,498		99,210
Other (1)	61,086		57,105		(37,891)		80,300		(18,094)		43,154		(18,451)		6,609
Total	$	1,255,872	$	571,319	$	138,626	$	1,965,817	$	917,297	$	419,371	$	84,149	$	1,420,817

Eliminations							(293,572)								(206,043)
Consolidated Net Sales							$	1,672,245							$	1,214,774

(1)Primarily includes revenue for ~~delivery,~~ advertising, royalties, parts, accessories, after-treatment products, ~~tariff~~ 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.

~~Table of Contents~~

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.

~~At January 23, 2021~~

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Contract Assets and at April 25, 2020, our consolidated balance sheet included $93.9 million and $17.1 million, respectively, of contract assets that represent the remaining consideration to which we are entitled prior to fulfilling our performance obligation. These assets are reported as other current assets in our consolidated balance sheet.

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”~~"contract liabilities")~~. At January 23, 2021, we included $162.6 million of customer deposits and $93.9 million of deferred revenues~~ are reported in accrued expenses and other current liabilities onwhile contract assets are reported as other current assets. The following table presents our ~~consolidated balance sheet. At the beginning of fiscal 2021, we had $40.7 million of customer deposits~~contract assets and ~~$17.1 million of deferred revenues.~~ liabilities:


(Unaudited, amounts in thousands)	1/22/2022		4/24/2021
Contract assets	$	151,698	$	108,460

Customer deposits	$	199,874	$	180,766
Deferred revenue	151,698		108,460
Total contract liabilities (1)	$	351,572	$	289,226

(1)During the ~~quarter and~~ nine months ended January ~~23, 2021,~~22, 2022, we recognized revenue of ~~$3.4~~$264.2 million ~~and $54.9 million, respectively,~~ related to our contract liability balance at April ~~25, 2020.~~

24, 2021.

The increase in our contract assets and contract liabilities at January 23, 2021 was primarily the result of increased written sales during the first nine months of fiscal 2021 compared with those in the fourth quarter of fiscal 2020.

Note ~~12:~~13: Segment Information

Our reportable operating segments include the Wholesale segment and the Retail segment. Effective in the first quarter of fiscal 2021, in order to better align with the manner in which we view and manage the business, coupled with economic and customer channel similarities, we revised our reportable operating segments by aggregating the former Upholstery segment with the former Casegoods segment to form the newly combined Wholesale segment. The change in our reportable operating segments reflects how the Company evaluates financial information used to make operating decisions. There were no changes to our Retail operating segment or Corporate & Other as part of this revision. Prior period results disclosed in the tables below have been revised to reflect these changes.

Wholesale Segment. Our Wholesale segment consists primarily of 3 operating segments: La-Z-Boy, our largest operating segment, our England subsidiary, and our casegoods operating segment that sells furniture under 3 brands: American Drew®, Hammary® and Kincaid®. The Wholesale segment also includes our international wholesale and manufacturing businesses. We aggregate these operating segments into 1 reportable segment because they are economically similar and ~~because they~~ 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 1 operating segment comprised of our ~~158~~163 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~~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.

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


		Quarter Ended				Nine Months Ended					Quarter Ended				Nine Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/23/21		1/25/20		1/23/21		1/25/20		(Unaudited, amounts in thousands)	1/22/2022		1/23/2021		1/22/2022		1/23/2021
Sales	Sales									Sales
Wholesale segment:	Wholesale segment:									Wholesale segment:
Sales to external customers	Sales to external customers	$	274,314	$	285,418	$	720,258	$	815,412	Sales to external customers	$	328,533	$	274,314	$	973,973	$	720,258
Intersegment sales	Intersegment sales	76,394		79,393		197,039		220,195		Intersegment sales	94,748		76,394		281,899		197,039
Wholesale segment sales	Wholesale segment sales	350,708		364,811		917,297		1,035,607		Wholesale segment sales	423,281		350,708		1,255,872		917,297

Retail segment sales	Retail segment sales	165,959		167,494		419,371		458,894		Retail segment sales	197,052		165,959		571,319		419,371

Corporate and Other:	Corporate and Other:									Corporate and Other:
Sales to external customers	Sales to external customers	29,923		22,944		75,145		62,395		Sales to external customers	45,988		29,923		126,953		75,145
Intersegment sales	Intersegment sales	3,768		2,725		9,004		8,137		Intersegment sales	3,991		3,768		11,673		9,004
Corporate and Other sales	Corporate and Other sales	33,691		25,669		84,149		70,532		Corporate and Other sales	49,979		33,691		138,626		84,149

Eliminations	Eliminations	(80,162)		(82,118)		(206,043)		(228,332)		Eliminations	(98,739)		(80,162)		(293,572)		(206,043)
Consolidated sales	Consolidated sales	$	470,196	$	475,856	$	1,214,774	$	1,336,701	Consolidated sales	$	571,573	$	470,196	$	1,672,245	$	1,214,774

Operating Income (Loss)	Operating Income (Loss)									Operating Income (Loss)
Wholesale segment	Wholesale segment	$	35,686	$	49,046	$	95,309	$	112,195	Wholesale segment	$	27,639	$	35,686	$	89,098	$	95,309
Retail segment	Retail segment	14,707		16,383		23,173		33,272		Retail segment	24,102		14,707		68,502		23,173
Corporate and Other	Corporate and Other	(15,979)		(13,116)		(31,804)		(40,131)		Corporate and Other	(12,254)		(15,979)		(29,629)		(31,804)
Consolidated operating income	Consolidated operating income	34,414		52,313		86,678		105,336		Consolidated operating income	39,487		34,414		127,971		86,678
Interest expense	Interest expense	(298)		(265)		(1,103)		(891)		Interest expense	(160)		(298)		(713)		(1,103)
Interest income	Interest income	285		844		902		2,093		Interest income	806		285		1,029		902
Other income (expense), net	Other income (expense), net	6,532		(5,998)		7,995		(5,390)		Other income (expense), net	(1,460)		6,532		(522)		7,995
Income before income taxes	Income before income taxes	$	40,933	$	46,894	$	94,472	$	101,148	Income before income taxes	$	38,673	$	40,933	$	127,765	$	94,472

Note ~~13:~~14: Income Taxes

Our effective tax rate was 24.8% and 25.9% for the third quarter and nine months ended January 22, 2022, respectively, compared with 27.7% and 26.4% for the third quarter and nine months ended January 23, 2021, ~~respectively, compared with 26.0% and 25.3% for~~respectively. The effective tax rate in the third quarter and nine months ended January ~~25, 2020, respectively.~~23, 2021, was impacted by a non-deductible fair value adjustment of the contingent consideration liability related to our Joybird acquisition. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

Note ~~14:~~15: Earnings per Share

Certain 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.

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


		Quarter Ended				Nine Months Ended					Quarter Ended				Nine Months Ended
(Unaudited, amounts in thousands, except per share data)	(Unaudited, amounts in thousands, except per share data)	1/23/21		1/25/20		1/23/21		1/25/20		(Unaudited, amounts in thousands, except per share data)	1/22/2022		1/23/2021		1/22/2022		1/23/2021
Numerator (basic and diluted):	Numerator (basic and diluted):									Numerator (basic and diluted):
Net income attributable to La-Z-Boy Incorporated	Net income attributable to La-Z-Boy Incorporated	$	29,232	$	34,512	$	68,965	$	75,174	Net income attributable to La-Z-Boy Incorporated	$	28,467	$	29,232	$	92,549	$	68,965
Income allocated to participating securities	Income allocated to participating securities	(9)		(45)		(33)		(121)		Income allocated to participating securities	—		(9)		(6)		(33)
Net income available to common Shareholders	Net income available to common Shareholders	$	29,223	$	34,467	$	68,932	$	75,053	Net income available to common Shareholders	$	28,467	$	29,223	$	92,543	$	68,932

Denominator:	Denominator:									Denominator:
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	46,261		46,262		46,064		46,545		Basic weighted average common shares outstanding	43,701		46,261		44,342		46,064
Add:
Contingent common shares	Contingent common shares	224		148		195		147		Contingent common shares	55		224		59		195
Stock option dilution	Stock option dilution	333		174		148		175		Stock option dilution	212		333		239		148
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	46,818		46,584		46,407		46,867		Diluted weighted average common shares outstanding	43,968		46,818		44,640		46,407

Earnings per Share:	Earnings per Share:									Earnings per Share:
Basic	Basic	$	0.63	$	0.75	$	1.50	$	1.61	Basic	$	0.65	$	0.63	$	2.09	$	1.50
Diluted	Diluted	$	0.62	$	0.74	$	1.49	$	1.60	Diluted	$	0.65	$	0.62	$	2.07	$	1.49

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 ~~had outstanding~~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 third quarter and nine months ended January 22, 2022, we excluded options to purchase ~~0.3~~0.2 million shares from the diluted share calculation. For the third quarter ended January 23, 2021, we did not exclude any options as the effect would have been anti-dilutive and for the nine months ended January 23, 2021, with a weighted average exercise price of $33.15. We excluded the effect of these options from our diluted share calculation since the weighted average exercise price of the options was higher than the average market price and including the options’ effect would have been anti-dilutive. Similarly, we excluded ~~options to purchase~~ 0.3 million shares from the diluted share ~~calculation for the nine months ended January 25, 2020.~~calculation.

Note ~~15:~~16: 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.

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The following table presents the fair value hierarchy for those assets and liabilities we measured at fair value on a recurring basis at January ~~23, 2021~~22, 2022 and April ~~25, 2020.~~24, 2021. There were no transfers into or out of Level 1, Level 2, or Level 3 for any of the periods presented.


At January 23, 2021
At January 22, 2022												At January 22, 2022
		Fair Value Measurements											Fair Value Measurements
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total		(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total
Assets	Assets											Assets
Marketable securities	Marketable securities	$	0	$	34,766	$	0	$	8,063	$	42,829	Marketable securities	$	—	$	36,381	$	—	$	7,318	$	43,699
Held-to-maturity investments	Held-to-maturity investments	2,643		0		0		0		2,643		Held-to-maturity investments	1,391		—		—		—		1,391
Cost basis investments	Cost basis investments	0		0		7,579		0		7,579		Cost basis investments	—		—		7,579		—		7,579
Total assets	Total assets	$	2,643	$	34,766	$	7,579	$	8,063	$	53,051	Total assets	$	1,391	$	36,381	$	7,579	$	7,318	$	52,669

Liabilities	Liabilities											Liabilities
Contingent consideration liability	Contingent consideration liability	$	0	$	0	$	12,500	$	0	$	12,500	Contingent consideration liability	$	—	$	—	$	4,600	$	—	$	4,600

At April 25, 2020
Fair Value Measurements
(Unaudited, amounts in thousands) Level 1 Level 2 Level 3 NAV(1) Total
Assets
Marketable securities $ 0 $ 31,691 $ 0 $ 6,515 $ 38,206
Held-to-maturity investments 3,337 0 0 0 3,337
Cost basis investment 0 0 6,479 0 6,479
Total assets $ 3,337 $ 31,691 $ 6,479 $ 6,515 $ 48,022
Liabilities
Contingent consideration liability $ 0 $ 0 $ 0 $ 0 $ 0


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 January ~~23, 2021~~22, 2022 and April ~~25, 2020,~~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 January ~~23, 2021,~~22, 2022, our Level 3 assets included non-marketable preferred shares and warrants to purchase common shares of 2 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. ~~During the nine months ended January 23, 2021, we invested an additional $1.1 million in one of these privately held start-up companies.~~ There were no ~~other~~ changes to the fair value of our Level 3 assets during the nine months ended January ~~23, 2021.~~22, 2022.

Our Level 3 liability includes our contingent consideration liability resulting from the Joybird acquisition. ~~During~~Based on the ~~nine months ended January 23,~~achievement of fiscal 2021 performance metrics, we ~~recognized an increase in~~paid $10.0 million of contingent consideration during the

second quarter of fiscal 2022. The fair value of our contingent consideration liability as of ~~$12.5 million, with a $10.0 million increase during the third quarter and a $2.5 million increase during the second quarter, as we expect~~January 22, 2022, reflects our expectation that consideration will be owed under the terms of the ~~earnout~~earn out agreement based on ~~significant improvements to our most recent financial projections.~~fiscal 2023 projections of Joybird revenue and earnings. The fair value ~~of contingent consideration is based on future revenues and earnings of the Joybird business in fiscal 2021 and fiscal 2023 and~~ is determined using a variation of the income approach, known as the real options method, whereby revenue and earnings ~~were~~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 ~~1.3% for~~1.8%. During the first nine months of fiscal ~~2021 milestone and 1.9% for~~2022, we recognized an increase in the ~~fiscal 2023 milestone.~~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 nine months ended January ~~23, 2021.~~22, 2022.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We have prepared this Management’s Discussion and Analysis as an aid to understanding our financial results. It should be read in conjunction with the accompanying Consolidated Financial Statements and related Notes to Consolidated Financial Statements. After a cautionary note regarding forward-looking statements, we begin with an introduction to our key businesses and then provide discussions of our results of operations, liquidity and capital resources, and critical accounting policies.

Cautionary Note Regarding Forward-Looking Statements

La-Z-Boy Incorporated and its subsidiaries (individually and collectively, "we," "our," "us," "La-Z-Boy" or the "Company") make "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements include information concerning expectations, projections or trends relating to our results of operations, financial results, financial condition, strategic initiatives and plans, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, future economic performance, business and industry and the effect of the novel coronavirus ("COVID-19") pandemic on our business operations and financial results.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include words such as "anticipates," "believes," "continues," "estimates," "expects," "feels," "forecasts," "hopes," "intends," "plans," "projects," "likely," "seeks," "short-term," "non-recurring," "one-time," "outlook," "target," "unusual," or words of similar meaning, or future or conditional verbs, such as "will," "should," "could," or "may." A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak to our views only as of the date of this report. These forward-looking statements are all based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties, many of which are unforeseeable and beyond our control, such as the continuing and developing impact of, and uncertainty caused by, the COVID-19 pandemic. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial performance.

Our actual future results and trends may differ materially from those we anticipate depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed in our Annual Report for the year ended April ~~25, 2020,~~24, 2021, under Item 1A, "Risk Factors" and Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations." Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in our Annual Report or any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or for any other reason.

Introduction

Our Business

We are the leading global producer of reclining chairs and the second largest manufacturer/distributor of residential furniture in the United States. The La-Z-Boy Furniture Galleries® stores retail network is the third largest retailer of single-branded furniture in the United States. We manufacture, market, import, export, distribute and retail upholstery furniture products under the La-Z-Boy®, England, Kincaid®, and Joybird® tradenames. In addition, we import, distribute and retail accessories and casegoods (wood) furniture products under the Kincaid®, American Drew®, Hammary®, and Joybird® tradenames.

As of January ~~23, 2021, we operated five~~22, 2022, our supply chain operations included the following:

•Five major manufacturing locations and ~~seven~~nine regional distribution centers in the United States and ~~three~~five facilities in Mexico to support our speed-to-market and customization strategy. In the first quarter of fiscal 2021, we announced the closure of our Newton, Mississippi upholstery manufacturing facility. Subsequent to the announced closure of our Newton facility, consumers have continued to allocate more discretionary spending to home furnishings and as a result, the demand for our products has outpaced our production capacity. In response, our supply chain team continues to demonstrate agility and flexibility to identify ways to increase production capacity on both an opportunistic and permanent basis. We have increased capacity by adding manufacturing cells at our Mexico Cut-and-Sew Center, adding weekend production shifts to our U.S. plants, and temporarily re-activatingstrategy

•A logistics company that distributes a portion of our ~~Newton, Mississippi upholstery manufacturing facility. Further, during~~products in the ~~third quarter of fiscal 2021 we opened a leased upholstery assembly plant, in San Luis Rio Colorado, Mexico.~~United States

•

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~~We operate a~~A wholesale sales office that is responsible for distribution of our product in the United Kingdom and ~~Ireland. We operate a~~Ireland

•An upholstery manufacturing business in the United Kingdom

•A global trading company in Hong Kong which helps us manage our Asian supply chain by establishing and maintaining relationships with our Asian suppliers, as well as identifying efficiencies and savings ~~opportunities.~~ opportunities

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We also participate in two consolidated joint ventures in Thailand that support our international businesses: one that operates a manufacturing facility and another that operates a wholesale sales office. WeAdditionally, we also have contracts with several suppliers in Asia to produce products that support our pure import model for casegoods.

We sell our products through multiple channels: to furniture retailers or distributors in the United States, Canada, and approximately 6065 other countries, including the United Kingdom, China, Australia, South Korea and New Zealand, directly to consumers through retail stores that we own and operate, and through our websites, www.la-z-boy.com and www.joybird.com.

•The centerpiece of our retail distribution strategy is our network of ~~351~~350 La-Z-Boy Furniture Galleries® stores and ~~563~~559 La-Z-Boy Comfort Studio® locations, each dedicated to marketing our La-Z-Boy branded products. We consider this dedicated space to be “proprietary.” ~~We own 158 of the La-Z-Boy Furniture Galleries~~

◦® ~~stores. The remainder of the La-Z-Boy Furniture Galleries~~® ~~stores, as well as all 563 La-Z-Boy Comfort Studio~~® ~~locations, are independently owned and operated.~~ La-Z-Boy Furniture Galleries® stores help consumers furnish their homes by combining the style, comfort, and quality of La-Z-Boy furniture with our available design services. We own 163 of the La-Z-Boy Furniture Galleries® stores, while the remainder are independently owned and operated.

◦La-Z-Boy Comfort Studio® locations are defined spaces within larger independent retailers that are dedicated to displaying and selling La-Z-Boy branded products. All 559 La-Z-Boy Comfort Studio® locations are independently owned and operated.

◦In total, we have approximately 7.8 million square feet of proprietary floor space dedicated to selling La-Z-Boy branded products in North America.

◦We also have approximately ~~2.8~~3.0 million square feet of floor space outside of the United States and Canada dedicated to selling La-Z-Boy branded products.

•Our other brands, England, American Drew, Hammary, and Kincaid enjoy distribution through many of the same outlets, with slightly over half of Hammary’s sales originating through the La-Z-Boy Furniture Galleries® store network.

◦Kincaid and England have their own dedicated proprietary in-store programs with ~~618~~635 outlets and approximately ~~1.9~~2.0 million square feet of proprietary floor space.

◦In total, our proprietary floor space includes approximately ~~12.5~~12.8 million square feet worldwide.

•Joybird sells product primarily online and has a limited amount of proprietary retail showroom floor space ~~it uses to develop its brand.~~including small format stores in key urban markets.

Our goal is to deliver value to our shareholders over the long term through executing our strategic initiatives. The foundation of our strategic initiatives is driving profitable sales growth in all areas of our business.

We plan to drive growth in the following ways:

•Leveraging and reinvigorating our brand with a consumer focus and expanded omni-channel presence.Our strategic initiatives to leverage and reinvigorate our iconic La-Z-Boy brand center on a renewed focus on leveraging the compelling La-Z-Boy comfort message, accelerating our omni-channel offering, and identifying additional consumer base growth opportunities. Our marketing platform featuring celebrity brand ambassador Kristen Bell drives brand recognition and injects youthful style and sensibility into our marketing campaign, which enhances the appeal of our brand with a younger consumer base. Further, our goal is to connect with consumers along their purchase journey through multiple means, whether online or in person. We are driving change throughout our digital platforms to improve the user experience, with a specific focus on the ease with which customers browse through our broad product assortment, customize products to their liking, find stores to make a purchase, or purchase at www.la-z-boy.com.

•Expanding the reach of our branded distribution channels, which include the La-Z-Boy Furniture Galleries® store network and the La-Z-Boy Comfort Studio® locations, our store-within-a-store format. While the consumer’s purchase journey may start digitally, our consumers also demonstrate an affinity for visiting our stores to shop, allowing us to frequently deliver the flagship La-Z-Boy Furniture Galleries® store, or La-Z-Boy Comfort Studio®, experience and provide design services. We expect our strategic initiatives in this ~~initiative~~area to generate growth in our Retail segment through an increased company-owned store count and in our Wholesale segment as our proprietary distribution network expands. We are not only focused on growing the number of locations, but also on upgrading existing store locations to our new concept designs.

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•~~Our~~Growing our company-owned retail business. We are focused on growing this business by increasing same-store sales through improved execution at the store level and by acquiring existing La-Z-Boy Furniture Galleries® stores and opening new La-Z-Boy Furniture Galleries® stores, primarily in markets that can be serviced through our regional distribution centers, where we see opportunity for growth, or where we believe we have opportunities for further market penetration.

•~~Our unique multi-channel distribution network~~Accelerating the growth of the Joybird brand. . During fiscal 2019, we purchased Joybird, a leading e-commerce retailer and manufacturer of upholstered furniture with a direct-to-consumer model. We believe that Joybird is a brand with significant potential and our strategic initiatives in this area focus on fueling profitable growth through an increase in digital marketing spend to drive awareness and customer acquisition, ongoing investments in technology, an expansion of product assortment, and additional small format stores in our key urban markets to enhance our consumers' omni-channel experience.

•Enhancing our enterprise capabilities to support the growth of our consumer brands and enable potential acquisitions for growth. In addition to our branded distribution channels, nearly ~~2,100~~2,000 other dealers sell La-Z-Boy products, providing us the benefit of multi-channel distribution. These outlets include some of the best-known names in the industry, including Slumberland, Nebraska Furniture Mart, Mathis Brothers and Raymour & Flanagan. ~~Our other brands in the Wholesale segment, England, American Drew, Hammary, and Kincaid, enjoy distribution through many of the same outlets.~~ We believe there is significant growth potential for our consumer brands through these retail channels.

•Our ~~on-trend products including stationary upholstered furniture featured in~~strategic initiatives focus on enhancing our ~~Live Life Comfortably~~® ~~marketing campaign~~. While we are known for our iconic recliners, they account for less than half of our sales in dollars, and we believe we have the potential to expand sales of our other products. To stimulate growth, our Live Life Comfortably® ~~marketing campaign features celebrity brand ambassador, Kristen Bell, and focuses on expanding our digital marketing and e-commerce~~enterprise capabilities to build traffic across our multiple digital and physical properties. As a millennial actress and social media influencer, Kristen injects youthful style and sensibility into our marketing campaign which enhances the appeal of our brand with a younger customer base. Further, we are driving change throughout our digital platforms to improve the user experience, with a specific focus on the ease by which customers browse through our broad product assortment, customize products to their liking, find stores to make a purchase, or purchase at www.la-z-boy.com.

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•Our innovative products, including stain-resistant iClean™ and eco-friendly Conserve ™ fabrics and our power products, some of which include a wireless hand held remote, dual mechanisms and articulating headrests~~. Our innovation, duo~~®~~, is a revolutionary product line that features the look of stationary furniture with the power to recline at the push of a button. We are committed to innovation throughout our business, and to~~ support ~~these efforts we opened our new state-of-the-art Innovation Center in fiscal 2019 at our Dayton, Tennessee campus.~~

•~~Our multi-faceted online strategy to participate in and leverage~~ the growth of ~~online furniture sales. During fiscal 2019, we purchased Joybird, a leading e-commerce retailer~~our consumer brands and ~~manufacturer~~improving the agility of ~~upholstered furniture, which positions us for growth in the ever-changing online selling environment and allows us to better reach millennial and Gen X consumers and leverage~~ our supply chain ~~assets. In addition, we continue to increase online sales of La-Z-Boy furniture through la-z-boy.com and other digital players, such as Wayfair.~~so that it can more broadly support all our consumer brands.

•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 and manufacturing businesses. We aggregate these operating segments into one reportable segment because they are economically similar and ~~because they~~ 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.~~Segment. Our Retail segment consists of one operating segment ~~comprising~~comprised of our ~~158~~163 company-owned La-Z-Boy Furniture Galleries® stores. The Retail segment sells primarily ~~sells~~ upholstered furniture, in addition to some casegoods and other accessories, to ~~the~~ end ~~consumer~~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. Joybird~~retailer that manufactures ~~and sells~~ upholstered furniture such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports ~~and sells~~ casegoods (wood) furniture, such as occasional tables and other accessories. Joybird sells to the end ~~consumers~~consumer primarily online through its website, www.joybird.com. None of the operating segments included in Corporate & Other meet the requirements of reportable ~~segments at this time.~~segments.

Impact of COVID-19

We have been and continue to be impacted by the COVID-19 pandemic. Specifically, beginning in the fourth quarter of fiscal 2020, the temporary closure of our manufacturing facilities, state and local restrictions limiting our ability to deliver product to consumers, and the temporary closure of our company-owned stores consistent with most retailers across North America negatively impacted our financial results. In response to the ~~COVID-19~~financial impacts of the pandemic, beginning at the end of fiscal 2020, we took ~~the following~~several actions ~~over the past nine months~~ to conserve cash in the near term and ~~ensure~~during the ~~well-being of our employees and their families, our customers and the communities in which we operate.~~

~~Fourth~~first quarter of fiscal ~~2020~~

•~~In accordance with government regulations, temporarily closed all manufacturing and retail operations~~

•~~Furloughed approximately 70% of our workforce~~

•~~Implemented a temporary 50% salary reduction for our executive team and 25% salary reduction for the rest of our salaried workforce along with the temporary suspension of our 401(k) match~~

•~~Temporarily eliminated our June quarterly dividend and suspended our share repurchase program~~

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~~First quarter of fiscal~~ 2021,

•~~Announced~~ we announced our business realignment plan, which included the reduction of our global workforce by about 10% across our manufacturing, retail, and corporate locations, ~~including~~and included the closure of our Newton, Mississippi upholstery manufacturing facility.

•~~Re-opened all of our other manufacturing facilities, retail stores, and corporate headquarters along with the implementation of best-practice health and safety protocols~~

•~~The majority of our furloughed employees returned to work, temporary salary reductions ended and full base salaries were reinstated for all employees other than the named executive officers~~

~~Second~~

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By the end of the first quarter of fiscal 2021,

•~~Temporary salary reduction~~ all retail and manufacturing locations had reopened, and since that time, we have experienced a strong pace of written order trends as consumers continue to allocate more discretionary spending to home furnishings. In response to demand for ~~the named executive officers ended~~our products outpacing our production capacity and ~~full base salaries were reinstated~~

•~~Reinstated 401(k) match for employees~~with backlog still at a high level, our supply chain team continues to demonstrate agility and ~~cash compensation for the board~~flexibility to identify ways to increase production capacity. We have increased capacity by adding manufacturing cells at our Mexico Cut-and-Sew Center, adding second shifts and weekend production shifts to our U.S. plants, and temporarily reactivating a portion of ~~directors~~

•~~The board of directors elected to reinstate~~our Newton, Mississippi upholstery manufacturing facility. In addition, we opened a regular quarterly dividend to shareholders of $0.07 per share, 50% of the dividend amount paid quarterly prior to the Company's suspension of dividends. This dividend was paid on September 15, 2020, to shareholders of record as of September 3, 2020.

~~Third quarter of fiscal 2021~~

•~~On November 17, 2020, the board of directors declared~~leased upholstery assembly plant in San Luis Rio Colorado, Mexico and a quarterly dividend to shareholders of $0.14 per share. This returns the quarterly dividend to the full amount paid quarterly prior to the company's suspension of dividends. The dividend was paid on December 15, 2020, to shareholders of record as of December 2, 2020.

•~~Resumed share repurchases under our previous share repurchase authorization.~~

~~Fourth quarter of fiscal 2021~~

•On February 16, 2021, the board of directors declared a quarterly dividend to shareholders of $0.15 per share, an increase of $0.01 per share, or 7%. The dividend is payable on March 15, 2021, to shareholders of record as of March 4, 2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The CARES Act, among other things, includes provisions providing for refundable payroll tax credits, deferment of employer social security payments, lengthening net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Inleased sewing facility in Parras, Mexico during the third quarter of fiscal 2021 and the ~~Company determined amounts that it is eligible~~first quarter of fiscal 2022, respectively. Further, during the first quarter of fiscal 2022, we signed a lease to ~~claim for employee retention payroll tax credits and recognized $5.2 million~~open additional manufacturing capacity in ~~non-operating income for wages and healthcare costs paid to employees during suspension of~~Torreon, Mexico which began operations ~~due to government orders which qualify under~~at the ~~provisions~~end of the ~~CARES Act. The Company continues to evaluate the impact that the CARES Act may have on its results~~third quarter of ~~operations, financial condition and/or financial statement disclosures.~~fiscal 2022.

We continue to actively manage the impact of the COVID-19 crisis ~~and there is~~as we face continued uncertainty regarding the impact COVID-19 will have on our financial operations in the near and long term. We also continue to actively manage our global supply chain and manufacturing operations, which have been adversely impacted with respect to availability and pricing of raw materials and freight based on uncontrollable factors as well as COVID-19 related constraints on our manufacturing capacity as we continue to prioritize the health and safety of our employees. The need for, or timing of, any future actions in response to COVID-19 is largely dependent on the mitigation of the spread of the virus along with the adoption and continued effectiveness of vaccines, status of government orders, directives and guidelines, recovery of the business environment, global supply chain conditions, economic conditions, and consumer demand for our ~~products.~~products, all of which are highly uncertain.

Results of Operations

Fiscal ~~2021~~2022 Third Quarter Compared with Fiscal ~~2020~~2021 Third Quarter

La-Z-Boy Incorporated


		Quarter Ended								Nine Months Ended									Quarter Ended					Nine Months Ended
(Unaudited, amounts in thousands, except percentages)	(Unaudited, amounts in thousands, except percentages)	01/23/21			01/25/20			% Change		01/23/21			01/25/20			% Change		(Unaudited, amounts in thousands, except percentages)	1/22/2022		1/23/2021		% Change	1/22/2022		1/23/2021		% Change
Sales	Sales	$	470,196		$	475,856		(1.2)	%	$	1,214,774		$	1,336,701		(9.1)	%	Sales	$	571,573	$	470,196	21.6%	$	1,672,245	$	1,214,774	37.7	%
Operating income	Operating income	34,414			52,313			(34.2)	%	86,678			105,336			(17.7)	%	Operating income	39,487		34,414		14.7%	127,971		86,678		47.6	%
Operating margin	Operating margin	7.3		%	11.0		%			7.1		%	7.9		%			Operating margin	6.9%		7.3%			7.7%		7.1%

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Sales

Consolidated sales ~~decreased $5.7~~increased $101.4 million, or 21.6%, and ~~$121.9~~$457.5 million, or 37.7%, in the third quarter and ~~in the~~ first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ago. Since retail and manufacturing locations ~~have~~ reopened after the ~~COVID-19 related temporary closures,~~COVID-related shutdowns at the beginning of fiscal 2021, we have ~~continued to experience~~experienced a strong pace of written order trends ~~through~~while facing challenges in the global supply chain. In response to heightened demand, we have expanded our manufacturing capacity, increased our strategic raw material reserves, and taken pricing and surcharge actions to counteract rising materials and freight costs. Despite continued supply chain headwinds, the ongoing impact of these strategic actions and sustained demand led to significant sales growth in the third quarter and first nine months of fiscal 2021. Compared with the third quarter of fiscal 2020, which had the strongest sales in our recent history, sales in the third quarter of fiscal 2021 were 1.2% lower primarily due to the impact of COVID-19-related production and delivery challenges combined with delays in overseas shipments in the supply chain that have impacted the speed at which we have been able to scale our manufacturing production capacity to meet record demand. The sales decrease in the first nine months of 2021,2022 compared with the same ~~period last~~periods a year was primarily due to the impact of COVID-19, which caused temporary store closures in the latter part of the fourth quarter of fiscal 2020 and a phased reopening in the first two months of fiscal 2021, temporary closures of our manufacturing facilities, and a negative impact on our ability to deliver product to customers.ago.

Operating Margin

Operating margin, which is calculated as operating income as a percentage of sales, decreased ~~370 basis points and 80~~40 basis points in the third quarter ~~and~~of fiscal 2022, but increased 60 basis points in the first nine months of fiscal ~~2021, respectively,~~2022, compared with the same periods a year ago.

•Gross margin, which is calculated as gross profit as a percentage of sales, ~~increased 80~~decreased 440 basis points and ~~160~~410 basis points in the third quarter and ~~the~~ first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ago.

◦~~Changes~~Continued increases in ~~our consolidated sales mix increased gross margin~~demand, as well as availability challenges in the global supply chain caused by ~~40 basis points~~COVID-19, including factory shutdowns in ~~both~~Vietnam, led to higher raw material and freight costs. In response, we took pricing and surcharge actions which mostly offset rising costs in the third quarter and to a lesser extent, the first nine months of fiscal ~~2021, compared with~~2022, as they were increasingly realized in the ~~same periods last~~second and third quarters of fiscal ~~year. This benefit was primarily driven by the growth~~2022.

Table of ~~Joybird, which has a higher gross margin than our Wholesale segment.~~Contents

◦The ~~third quarter~~expansion of our manufacturing capacity, in response to increased demand and sustained backlog, has led to higher production costs. Further, continued labor challenges and the ~~first nine months~~unavailability of last fiscal year included supply chain initiative costs, primarily associated with the closure of our Redlands manufacturing facility, which were higher when compared with the expenses resulting from our business alignment actions in fiscal 2021. The absence of higher business initiative costs in fiscal 2021component parts has resulted in ~~a comparative 20 basis point and~~temporary plant inefficiencies.

◦Changes in our consolidated mix improved gross margin by 30 basis ~~point increase in gross margin~~points and 50 basis points in the third quarter and ~~the first nine months of this year, respectively.~~

◦~~Additionally, Joybird experienced significant improvements in gross margin in the third quarter and the~~ first nine months of fiscal ~~2021, primarily resulting from product pricing actions taken, increase~~2022, respectively. The benefit was led by growth in ~~average ticket~~our Retail segment and ~~favorable product mix. The work~~Joybird, both of which have higher gross margins relative to integrate Joybird and leverage synergies has begun to come to fruition and as we build on the trajectory of the business, we will continue to balance investments in top-line growth with bottom-line performance.

◦~~Partially offsetting these increases, higher costs related to expanding~~ our ~~manufacturing capacity in the third quarter and the first nine months of fiscal 2021 negatively impacted gross margin when compared with the same periods last fiscal year.~~Wholesale segment.

•Selling, general and administrative ("SG&A") expenses as a percentage of sales ~~increased 450~~decreased 400 basis points and ~~increased 240~~470 basis points in the third quarter and ~~the~~ first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ago.

◦The third quarter and first nine months of fiscal 2021 included a $10.0 million and a $12.5 million pre-tax charge, respectively, resulting from the increase in the fair value of the Joybird contingent consideration liability, ~~increased SG&A $10.0 million, or~~the absence of which in fiscal 2022 drove a comparative 210 basis ~~points~~point and 110 basis point decline in SG&A as a percentage ~~of sales, and $12.5 million, or 100 basis points as a percent~~ of sales in the third quarter and first nine months of fiscal 2022, respectively.

◦The first nine months of fiscal 2022 included a gain resulting from the sale of our Newton, Mississippi manufacturing facility while the first nine months of fiscal 2021 ~~respectively.~~

◦~~The third quarter and the first nine months of last fiscal year~~ included ~~the sale of~~expenses resulting from our ~~Redlands facility, which~~business realignment plan. These actions resulted in a ~~$9.7 million pre-tax gain, the absence of which in fiscal 2021 drove a~~ comparative ~~210~~40 basis point ~~and 80 basis point increase~~decrease in SG&A ~~expense~~ as a percentage of ~~sale in the third quarter and in the first nine months of this fiscal year, respectively.~~

◦~~Changes in our consolidated~~ sales ~~mix increased SG&A expense as a percentage of sales by 30 basis points and 40 basis points in the third quarter and~~ in the first nine months of fiscal ~~2021, respectively. This increase was primarily driven by~~2022 compared with the ~~growth~~same period of ~~Joybird, which has a higher SG&A rate than our Wholesale segment.~~fiscal 2021.

◦~~Additionally,~~The remaining decrease in both the third quarter and first nine months of fiscal ~~2021, SG&A expense as a percentage of sales increased compared with the same period last year primarily~~2022 was due to ~~lower delivered~~higher sales volume relative to fixed costs coupled with higher selling expenses driven by the increase in written sales. The increase was partially offset by cost reductions in response to the lower sales volume driven by the COVID-19 closures, including a decrease in marketing and travel expenses.costs.

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We discuss each segment’s results in the following section.

Wholesale Segment

Quarter Ended Nine Months Ended
(Unaudited, amounts in thousands, except percentages) 1/23/21 1/25/20 %
Change 01/23/21 01/25/20 %
Change
Sales $ 350,708 $ 364,811 (3.9) % $ 917,297 $ 1,035,607 (11.4) %
Operating income 35,686 49,046 (27.2) % 95,309 112,195 (15.1) %
Operating margin 10.2 % 13.4 % 10.4 % 10.8 %


	Quarter Ended					Nine Months Ended
(Unaudited, amounts in thousands, except percentages)	1/22/2022		1/23/2021		% Change	1/22/2022		1/23/2021		% Change
Sales	$	423,281	$	350,708	20.7%	$	1,255,872	$	917,297	36.9	%
Operating income	27,639		35,686		(22.5)%	89,098		95,309		(6.5)	%
Operating margin	6.5%		10.2%			7.1%		10.4%

Sales

The Wholesale segment’s sales ~~decreased $14.1~~increased $72.6 million, or 20.7%, and ~~$118.3~~$338.6 million, or 36.9%, in the third quarter and ~~in the~~ first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ago. ~~Sales were lower~~More than half of the sales increase in the third quarter was driven by pricing and surcharge actions taken in response to rising manufacturing costs, with the remaining increase primarily attributable to higher volume. Partially offsetting these increases, sales in our casegoods business were adversely impacted in the third quarter of fiscal 2022 by product unavailability due to temporary COVID-related shutdowns in Vietnam. The sales increase in the first nine months was primarily a result of higher volume and to a lesser extent pricing and surcharge actions, as they were increasingly realized in the second and third quarters of fiscal ~~2021 compared with~~2022. Higher sales volume in both the ~~same periods last year, due to a decrease in volume~~third quarter and unfavorable product mix as COVID-19-related production and delivery challenges, and delays in overseas shipments in the supply chain, have impacted the speed at which we have been able to scale our manufacturing production capacity to meet record demand. Further, sales in the first nine months of fiscal ~~2021 were lower than~~2022 was driven by increased demand following the ~~same period last year due to~~reopening of our stores after the ~~impact of COVID-19, which caused temporary store and manufacturing facility closures in~~COVID-related shutdowns at the ~~latter part of the fourth quarter~~beginning of fiscal ~~2020~~2021 and, ~~a phased reopening in the first two months of the first quarter of fiscal 2021.~~since that time, we have continued to expand and scale our manufacturing capabilities to meet demand and work through our record backlog.

Operating Margin

Operating margin decreased ~~320~~370 basis points and 40330 basis points in the third quarter and ~~in the~~ first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ago.

● •Gross margin decreased 70480 basis points and 10500 basis points in the third quarter and ~~in the~~ first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ago.

◦~~In the third quarter~~Higher demand and ~~the first nine months of fiscal 2021, gross margin decreased 160 basis points and 110 basis points, respectively, compared with the same periods last fiscal year, due~~global supply chain challenges led to ~~higher costs related to expanding our manufacturing capacity as well as COVID-19 related issues which impacted our production and delivery volume and product mix.~~

◦~~Further, in the third quarter of fiscal 2021,~~ rising raw material and freight costs, ~~negatively impacted gross margin by 40 basis points compared with the same period last year.~~

◦Partially offsetting these items was a decrease in promotional activity in response to strong product demand, which improved gross margin 100 basis points and 90 basis points in the third quarter and in the first nine months of fiscal 2021, respectively, compared with the same periods last year.

◦~~Additionally, the third quarter and the first nine months of last fiscal year included supply chain initiative~~higher tariff costs ~~primarily associated with the closure of our Redlands, California manufacturing facility, which were higher when compared with the expenses~~ resulting from ~~our business realignment actions~~sourcing changes, and decreased availability of casegoods products due to temporary factory shutdowns in ~~the first nine months of 2021. The absence of higher business initiative costs in fiscal 2021~~Vietnam. These challenges resulted in ~~a comparative 30~~an 850 basis point and 40770 basis point ~~increase~~decrease in ~~the segment's~~ gross margin in the third quarter and ~~in the first nine months, respectively.~~

~~● SG&A expense as a percentage of sales increased 250 basis points and 30 basis points in the third quarter and in the~~

first nine months of fiscal ~~2021,~~2022, respectively, ~~compared with the same periods a year ago.~~

◦~~The third quarter and the first nine months of last fiscal year included the sale of our Redlands facility, which resulted in a $9.7 million pre-tax gain, the absence~~ of which ~~in fiscal 2021 drove a comparative 280 basis point and~~ 110 basis ~~point increase in SG&A expense as a percentage of sales in~~points and 40 basis points were driven by our casegoods business which was adversely impacted by the ~~third quarter and in the first nine months of this year, respectively.~~

◦Partially offsetting the above item was a 20 basis point and 30 basis point reduction in SG&A as a percentage of sales in the third quarter and in the first nine months of the fiscal 2021, respectively, due to favorable adjustments to our bad debt reserves resulting from improved business conditions.

◦Additionally, SG&A as a percentage of sales decreased in the third quarter and in the first nine months of fiscal 2021 due to disciplined expense management related to our spending on advertising given the strong order demand and lower administrative expenses due to COVID-19 travel restrictions, and was furtherVietnam shutdowns.

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~~reduced~~◦In response to the higher raw material and freight costs, we took pricing and surcharge actions to mitigate their impact, resulting in a 680 basis point and 540 basis point benefit to gross margin in the third quarter and first nine months of fiscal 2022, respectively.

◦Continued manufacturing capacity expansion, in response to significant increases in written order demand, along with temporary component part unavailability, and sustained labor challenges drove an increase in production costs resulting in a 260 basis point and 300 basis point decrease in gross margin in the third quarter and first nine months of fiscal 2022, respectively.

•SG&A expense as a percentage of sales decreased 110 basis points and 170 basis points in the third quarter and first nine months of fiscal 2022, respectively, compared with the same periods a year ago.

◦The decrease in SG&A as a percentage of sales in both periods was primarily due to ~~lower salaries~~higher sales volume relative to both fixed costs and ~~wages driven by~~marketing spend.

◦Additionally, the first nine months of fiscal 2022 included a gain resulting from the sale of our Newton, Mississippi manufacturing facility while the first nine months of fiscal 2021 included expenses resulting from our business realignment ~~plan and reduction~~plan. These actions resulted in ~~workforce~~a comparative 50 basis point decrease in the segment's SG&A as a percentage of sales in the first ~~quarter~~nine months of fiscal ~~2021.~~2022.

Retail Segment


		Quarter Ended								Nine Months Ended									Quarter Ended					Nine Months Ended
(Unaudited, amounts in thousands, except percentages)	(Unaudited, amounts in thousands, except percentages)	1/23/21			1/25/20			% Change		01/23/21			01/25/20			% Change		(Unaudited, amounts in thousands, except percentages)	1/22/2022		1/23/2021		% Change	1/22/2022		1/23/2021		% Change
Sales	Sales	$	165,959		$	167,494		(0.9)	%	$	419,371		$	458,894		(8.6)	%	Sales	$	197,052	$	165,959	18.7%	$	571,319	$	419,371	36.2	%
Operating income	Operating income	14,707			16,383			(10.2)	%	23,173			33,272			(30.4)	%	Operating income	24,102		14,707		63.9%	68,502		23,173		195.6	%
Operating margin	Operating margin	8.9		%	9.8		%			5.5		%	7.3		%			Operating margin	12.2%		8.9%			12.0%		5.5%

Sales

The Retail segment’s sales ~~decreased $1.5~~increased $31.1 million, or 18.7%, and ~~$39.5~~$151.9 million, or 36.2%, in the third quarter and ~~in the~~ first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ~~ago. The decrease in sales in the third quarter of fiscal 2021 was primarily due to~~ago, led by a 6.3% decrease in same-store delivered sales, or $10.3 million, due to COVID-19-related production challenges in our wholesale segment. Partially offsetting this decline was the benefit of $8.0 million of delivered sales from our recently acquired Seattle-based stores. The decrease in sales in the first nine months of fiscal 2021 was primarily due to a 11.7%, or $52.1 million, decrease16.4% and 32.9% increase in delivered same-store sales, ~~driven by a phased~~respectively. Since the reopening of our retail ~~locations throughout~~stores in the ~~first two months of the first quarter~~beginning of fiscal 2021, ~~due~~we continue to COVID-19 and subsequent COVID-19-related production challenges in our wholesale segment. Partially offsetting this decline was the benefit of $11.4 million of delivered sales from our recently acquired Seattle-based stores. In fiscal 2021, since all of our retail stores have re-opened, we have continued to experience strong sales trends. Written same store sales were up 9.1% and 18.2% in the third quarter and in the first nine months of fiscal 2021, respectively, compared with the same periods last year, driven by increasedsee sustained higher demand for products in the home furnishings category and are continuing to experience strong ~~execution~~sales trends as written same-store sales increased 2.7% over first nine months of fiscal 2022, compared with the same period a year ago. While written same-store sales decreased 1.0% in the third quarter of fiscal 2022, compared with the same period a year ago, compared to the pre-pandemic third quarter of fiscal 2020, written same-store sales have increased at ~~the store level.~~a compound annual growth rate of 3.6%. Same-store delivered sales include the sales of all currently active stores which have been open and company-owned for each comparable period.

Operating Margin

Operating margin ~~decreased 90~~increased 330 basis points and ~~180~~650 basis points in the third quarter and ~~in the~~ first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ago.

●

•Gross margin ~~increased 10~~decreased 120 basis points and 2080 basis points in the third quarter and ~~in the~~ first nine months of fiscal ~~2021, respectively, compared with the same periods a year ago.~~

~~● SG&A expense as a percentage of sales increased 100 basis points and 200 basis points in the third quarter and in the first nine months of fiscal 2021,~~2022, respectively, compared with the same periods a year ago, primarily due to ~~lower~~the timing difference between higher product costs resulting from the pricing and surcharge actions taken by our manufacturing business and pricing actions taken by the Retail business which are realized upon delivery.

•SG&A expense as a percentage of sales decreased 450 basis points and 730 basis points in the third quarter and first nine months of fiscal 2022, respectively, compared with the same periods a year ago, primarily due to higher delivered sales relative to marketing spend and fixed costs, ~~coupled with higher~~mainly occupancy and selling ~~expenses driven by the increase in written sales. This was partially offset by lower advertising given the strong demand and lower administrative expenses due to COVID-19 travel restrictions.~~expenses.

~~Corporate and Other~~

Quarter Ended Nine Months Ended
(Unaudited, amounts in thousands, except percentages) 01/23/21 01/25/20 %
Change 01/23/21 01/25/20 %
Change
Sales $ 33,691 $ 25,669 31.3 % $ 84,149 $ 70,532 19.3 %
Intercompany eliminations (80,162) (82,118) 2.4 % (206,043) (228,332) 9.8 %
Operating loss (15,979) (13,116) (21.8) % (31,804) (40,131) 20.7 %

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Corporate and Other


	Quarter Ended					Nine Months Ended
(Unaudited, amounts in thousands, except percentages)	1/22/2022		1/23/2021		% Change	1/22/2022		1/23/2021		% Change
Sales	$	49,979	$	33,691	48.3%	$	138,626	$	84,149	64.7	%
Intercompany eliminations	(98,739)		(80,162)		(23.2)%	(293,572)		(206,043)		(42.5)	%
Operating loss	(12,254)		(15,979)		23.3%	(29,629)		(31,804)		6.8	%

Sales

Sales increased ~~$8.0~~$16.3 million and ~~$13.6~~$54.5 million in the third quarter and ~~in the~~ first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ~~ago.~~ago, primarily led by Joybird sales which increased 55.8% to $44.5 million and 72.7% to $123.4 million, respectively. The ~~increase in sales in the third quarter of fiscal 2021, compared with the same period last year, was primarily due to a $6.6 million, or 30.3%, increase~~growth in Joybird sales ~~to $28.6 million, primarily~~was driven by ~~strong written order trends through the first nine months of this fiscal year as we continue to experience~~ increased demand for products in the home furnishings category, investments in marketing and website enhancements resulting in higher online conversion, increased ~~online traffic. In~~pricing and favorable product mix, and the ~~first nine months~~addition of ~~fiscal 2021, compared with the same period last year, Joybird~~retail store locations. Further, sales increased $11.6 million to $71.5 million despite lower delivered sales in the first quarter of fiscal 2021 due to the impact of COVID-19 which resulted in the temporary closure of our manufacturing facilities in the latter part of the fourth quarter of fiscal 2020 and into the first quarter of fiscal 2021. Written sales for Joybird were up 79% and 47% in the third quarter and in the first nine months of fiscal 2021 were negatively impacted by COVID-19, although to a lesser extent than our other retail businesses as Joybird primarily operates in the online, direct-to-consumer marketplace. Written sales for Joybird were up 27.4% and 36.8% in the third quarter and first nine months of fiscal 2022, respectively, compared with the same periods a year ~~ago.~~ago, driven by significant investments in marketing.

Intercompany eliminations ~~decreased~~increased in ~~both~~ the third quarter and ~~in the~~ first nine months of fiscal ~~2021~~2022 compared with the same periods a year ago due to ~~lower~~higher sales from our Wholesale segment to our Retail segment, ~~due to lower~~driven by higher sales ~~volume resulting from COVID-19-related production and delivery challenges and delays in overseas shipments~~ in the ~~supply chain.~~Retail segment.

Operating Loss

Our Corporate and Other operating loss ~~increased $2.9~~decreased $3.7 million and ~~$8.3~~$2.2 million in the third quarter and first nine months of fiscal ~~2021,~~2022, respectively, compared with the same periods a year ago. ~~The operating loss~~

•There was a comparative benefit in the third quarter and ~~in the~~ first nine months of fiscal ~~2021 includes~~2022, which was absent a $10.0 million and a $12.5 million pre-tax charge recognized in the same periods last year, respectively, resulting from ~~the recognition of~~ the increase in the fair value of the Joybird contingent consideration liability ~~as we expect consideration will be owed under the terms of the earnout agreement in connection with the acquisition of Joybird~~ based on ~~significant improvements to our most recent~~ financial ~~projections. These pre-tax charges were partially offset by Joybird's positive~~projections at that time.

•Partially offsetting the item noted above, operating ~~profits~~loss increased in the third quarter and first nine months of fiscal ~~2021, which have improved when compared with the same periods last year~~2022 primarily due to decreased operating profits at Joybird resulting from significant ~~increases~~investments in ~~gross margin~~marketing to drive customer acquisition and awareness combined with rising raw material and freight costs due to ~~product pricing actions taken, an increase in average ticket~~higher demand and ~~favorable product mix. The work to integrate Joybird and leverage synergies has begun to come to fruition and as we build on the trajectory of the business, we will continue to balance~~global supply chain challenges.

•Increased investments in ~~top-line growth with bottom-line performance.~~our technology infrastructure also contributed to the increased operating loss in the third quarter and first nine months of fiscal 2022.

Non-Operating Income (Expense)

Other Income (Expense), Net

Other income (expense), net was $1.5 million of expense in the third quarter of fiscal 2022 compared with $6.5 million of income in the third quarter of fiscal ~~2021 compared with $6.0 million of~~2021. The expense in ~~the third quarter of~~ fiscal ~~2020.~~2022 was primarily due to unrealized losses on investments. The income in fiscal 2021 was primarily due to $5.2 million of payroll tax credits resulting from the CARES Act along with unrealized gains on investments. ~~The expense in fiscal 2020 was primarily due to a $6.0 million impairment of our investment in a privately held start-up company.~~

Other income (expense), net was $0.5 million of expense in the first nine months of fiscal 2022 compared with $8.0 million of income in the first nine months of fiscal ~~2021 compared with $5.4 million of~~2021. The expense in ~~the first nine months of~~ fiscal ~~2020.~~2022 was primarily due to exchange rate losses. The income in ~~the first nine months of~~ fiscal ~~year~~ 2021 was primarily due to the payroll tax credits noted above along with unrealized gains on investments. The expense in the first nine months of fiscal 2020 was primarily due to the investment impairment charge noted above combined with exchange rate losses, partially offset by the return of $1.9 million in pre-tax cash from the settlement of our defined-benefit pension plan in our La-Z-Boy operating unit, which occurred during the fourth quarter of fiscal 2019.

Income Taxes

Our effective tax rate was 24.8% and 25.9% for the third quarter and nine months ended January 22, 2022, respectively, compared with 27.7% and 26.4% for the third quarter and ~~the first~~ nine months ~~of fiscal~~ended January 23, 2021, ~~respectively, compared with 26.0% and 25.3% for~~respectively. The effective tax rate in the third quarter and ~~the first~~ nine months ~~of fiscal 2020, respectively. The increase in our effective tax rate in fiscal~~ended January 23, 2021, ~~compared with fiscal 2020 is primarily due to the tax effect~~was impacted by a non-deductible fair value adjustment of the ~~non-deductible increase in the Joybird~~ contingent consideration ~~liability.~~ liability related to our Joybird acquisition. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

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Liquidity and Capital Resources

Our sources of liquidity include cash and cash equivalents, short-term and long-term investments, cash from operations, and amounts available under our credit facility. We believe these sources remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, and fulfill other cash requirements for day-to-day operations and capital expenditures. We had cash, cash equivalents and restricted cash of ~~$393.0~~$240.0 million at January ~~23, 2021,~~22, 2022, compared with ~~$263.5~~$394.7 million at April ~~25, 2020.~~24, 2021. In addition, we had investments to enhance our returns on cash of ~~$30.6~~$29.8 million at January ~~23, 2021,~~22, 2022, compared with ~~$28.6~~$32.5 million at April ~~25, 2020.~~24, 2021.

~~We maintain a revolving credit facility secured primarily~~The following table illustrates the main components of our cash flows:


	Nine Months Ended
(Unaudited, amounts in thousands)	1/22/2022		1/23/2021
Cash Flows Provided By (Used For)
Net cash provided by operating activities (1)	$	45,192	$	249,831
Net cash used for investing activities	(77,036)		(29,897)
Net cash used for financing activities	(122,288)		(93,626)
Exchange rate changes	(593)		3,191
Change in cash, cash equivalents and restricted cash	$	(154,725)	$	129,499

(1)The decrease in net cash provided by our accounts receivable, inventory, cash deposit and securities accounts. Availability under the credit agreement fluctuates according to a borrowing base calculated on eligible accounts receivable and inventory. We amended this agreement on December 19, 2017, to extend its maturity date to December 19, 2022. The credit agreement includes affirmative and negative covenants that apply under certain circumstances, including a fixed-charge coverage ratio requirement that applies when excess availability under the credit lineoperating activities year over year is ~~less than certain thresholds. In response to economic conditions resulting from COVID-19, to strengthen our financial position and maintain~~

liquidity, we proactively borrowed $75.0 million from our revolving credit facility in the fourth quarter of 2020. Subsequently, considering business performance, liquidity and trends during the first six months of fiscal 2021, $25.0 million was repaid in the first quarter of fiscal 2021 and $50.0 million was repaid in the second quarter of fiscal 2021, bringing the outstanding balance on our revolving credit facility to zero. As of January 23, 2021, borrowings outstanding under the revolving credit facility remain at zero and we were not subject to the fixed-charge coverage ratio requirement and had excess availability of $56.7 million of the $150.0 million credit commitment. Excess availability was lower than the total remaining credit commitment primarily due to ~~higher reserves required due to~~ the significant increase in customer deposits during fiscal 2021 resulting from a surge in written sales once retail stores reopened, along with a significant increase in inventory balances in fiscal 2022 to support increased sales demand and manufacturing capacity.

Operating Activities

During the first nine months of fiscal ~~2021.~~2022, net cash provided by operating activities was $45.2 million. Our cash provided by operating activities was primarily attributable to net income generated during the period partially offset by an increase in working capital. The increase in working capital was led by higher inventory to ensure input material availability to support increased sales demand and manufacturing capacity.

~~Capital expenditures for~~Investing Activities

During the first nine months of fiscal ~~2021 were $26.7~~2022, net cash used for investing activities was $77.0 million, primarily due to the following:

•Cash used for capital expenditures in the period was $58.6 million, compared with ~~$35.5~~$26.7 million during the first nine months of fiscal ~~2020. Capital expenditures in the first nine months of fiscal~~ 2021, ~~included spending on manufacturing machinery and equipment,~~which primarily related to plant upgrades to our ~~upholstered furniture~~upholstery manufacturing ~~plant~~and distribution facilities in ~~Dayton, Tennessee,~~Neosho, Missouri, improvements to ~~select~~our retail stores, ~~and costs for~~ new ~~production~~upholstery manufacturing capacity in ~~Mexico.~~Mexico, and technology upgrades. Spending on these items will continue into the fourth quarter, with full year fiscal 2022 capital expenditures expected to be in the range of $80 to $85 million. We have no material contractual commitments outstanding for future capital expenditures. ~~We expect capital expenditures~~

•Cash used for acquisitions was $24.8 million, related to ~~be in~~ the ~~range~~acquisition of ~~$35 to $40 million for fiscal 2021, which will include plant upgrades to our upholstery~~the Furnico manufacturing business and ~~distribution facilities in Dayton,~~the Alabama, Chattanooga, Tennessee, and ~~Neosho, Missouri, new upholstery manufacturing capacity in Mexico, technology upgrades and improvements to a number of our~~Long Island, New York retail ~~stores.~~businesses.

In response to the COVID-19 pandemic, in the fourth quarter of fiscal 2020, we took action to conserve cash in the near term. Actions taken at that time included the furlough of approximately 70% of our workforce while our manufacturing and retail operations were temporarily closed, temporary 50% salary reductions for our executive team and 25% salary reductions for the rest of our salaried workforce, along with the temporary suspension of our 401(k) match and our share repurchase program. Further, effective as of June 4, 2020, the Company reduced its global workforce by about 10% across its manufacturing, retail and corporate locations, including the closure of its Newton, Mississippi upholstery manufacturing facility.Financing Activities

On 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 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 the satisfaction of customary conditions. As of January 22, 2022, we have no borrowings outstanding under the ~~end~~Credit Facility.

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We believe our cash on hand, in addition to our available Credit Facility, will provide adequate liquidity for our business operations over the next 12 months.

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.

During the first ~~quarter~~nine months of fiscal ~~2021, our manufacturing facilities~~2022, net cash used for financing activities was $122.3 million, primarily due to the following:

•Our board of directors has authorized the repurchase of company stock and ~~stores had all re-opened and~~we spent $75.6 million in the ~~majority~~first nine months of ~~our furloughed employees had returned~~fiscal 2022 to ~~work. Full base salaries were reinstated as of June 1, 2020, for all employees other than the named executive officers of the Company. As of~~repurchase 2.1 million shares. On August ~~1, 2020, full base salaries were reinstated for our named executive officers, as were the Company's 401(k) match and cash compensation for~~17, 2021, the board of ~~directors.~~directors approved a 6.5 million increase in its share repurchase authorization and as of January 22, 2022, 7.9 million shares remained available for repurchase pursuant to this authorization.

•Cash paid for holdback payments made on prior period acquisitions was $23.0 million, which primarily included contingent consideration and guaranteed payments related to the acquisition of Joybird and guaranteed payments related to the acquisition of the Seattle, Washington business.

•Cash paid to our shareholders in quarterly dividends was $20.6 million. Our board of directors has sole authority to determine if and when we will declare future dividends and on what terms. ~~As announced on March 29, 2020, the June 2020 dividend was eliminated to preserve near-term financial flexibility in response to the impact of COVID-19. On August 18, 2020,~~We expect the board ~~of directors elected~~ to ~~reinstate a~~continue declaring regular quarterly ~~dividend to shareholders of $0.07 per share, 50% of~~cash dividends for the dividend amount paid quarterly prior to the Company's suspension of dividends. This dividend was paid on September 15, 2020, to shareholders of record as of September 3, 2020. On November 17, 2020, the board of directors declared a quarterly dividend to shareholders of $0.14 per share. This returned the quarterly dividend to the full amount paid quarterly prior to the company's suspension of dividends. The dividend was paid on December 15, 2020, to shareholders of record as of December 2, 2020. Further, on February 16, 2021, the board of directors declared a quarterly dividend to shareholders of $0.15 per share, an increase of $0.01 per share or 7%. The dividend is payable on March 15, 2021, to shareholders of record as of March 4, 2021.

foreseeable future, but it may discontinue doing so at any time.

Our board of directors has authorized the repurchase of company stock. As announced on March 29, 2020, share repurchases under the board of directors’ prior authorization were temporarily halted to prioritize near-term financial flexibility in response

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to the impact of COVID-19, as such, there were no share repurchases in the first and second quarters of fiscal 2021. On December 14, 2020, we resumed share repurchases under the previous share repurchase authorization, pursuant to which 4.5 million shares currently remain available for purchase. We spent $0.9 million in the third quarter of fiscal 2021 to purchase less than 0.1 million shares. With the cash flows we anticipate generating in fiscal 2021, we expect to continue to be opportunistic in purchasing company stock.

~~The following table illustrates the main components of our cash flows:~~

Nine Months Ended
(Unaudited, amounts in thousands) 1/23/21 1/25/20
Cash Flows Provided By (Used For)
Net cash provided by operating activities $ 249,831 $ 119,759
Net cash used for investing activities (35,680) (31,114)
Net cash used for financing activities (87,843) (53,294)
Exchange rate changes 3,191 1,107
Change in cash, cash equivalents and restricted cash $ 129,499 $ 36,458

~~Operating Activities~~

During the first nine months of fiscal 2021, net cash provided by operating activities was $249.8 million. Our cash provided by operating activities was primarily attributable to a $121.9 million increase in customer deposits driven by the increase in written Retail and Joybird sales in the period and net income, including non-cash adjustments, generated during the period.

~~Investing Activities~~

~~During the first nine months of fiscal 2021, net cash used for investing activities was $35.7 million,~~ ~~primarily due to c~~ash used for capital expenditures in the period of $26.7 million, which primarily related to spending on manufacturing machinery and equipment, upgrades to our Dayton, Tennessee upholstered furniture manufacturing facility, improvements to select retail stores, and costs for new production capacity in Mexico. Additionally, cash used for acquisitions was $7.8 million, which primarily included guaranteed payments related to the acquisition of Joybird, and the acquisition of the assets of the Seattle, Washington business that operated six independently owned La-Z-Boy Furniture Galleries® ~~stores and one warehouse.~~

~~Financing Activities~~

During the first nine months of fiscal 2021, net cash used for financing activities was $87.8 million, primarily due to $75.0 million in payments on our revolving credit facility, $9.7 million paid to our shareholders in quarterly dividends, and $8.5 million in dividends paid to our joint venture minority partners, resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently reinvested.

Exchange Rate Changes

Due to changes in exchange rates, our cash, cash equivalents, and restricted cash ~~increased~~decreased by ~~$3.2~~$0.6 million from the end of fiscal year ~~2020~~2021 to the end of the third quarter of fiscal ~~2021.~~2022. These changes impacted our cash balances held in Canada, Thailand, and the United Kingdom.

Other

During the third quarter of fiscal ~~2021,~~2022, there were no material changes to the information about our contractual obligations

and commitments shown in the table contained in our Annual Report on Form 10-K for the fiscal year ended April ~~25, 2020.~~24, 2021. We do not expect our continuing compliance with existing federal, state and local statutes dealing with protection of the environment to have a material effect on our capital expenditures, earnings, competitive position or liquidity.

Critical Accounting Policies

We disclosed our critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended April ~~25, 2020.~~24, 2021. There were no material changes to our critical accounting policies or estimates during the nine months ended January ~~23, 2021.~~22, 2022.

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Recent Accounting Pronouncements

See Note 1, Basis of Presentation, to the ~~condensed~~ consolidated financial statements included in this Form 10-Q for a discussion of recently adopted accounting standards and other new accounting standards.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the first nine months of fiscal ~~2021,~~2022, there were no material changes from the information contained in Item 7A of our Annual Report on Form 10-K for the fiscal year ended April ~~25, 2020.~~24, 2021.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. There were no changes in our internal controls over financial reporting that occurred during the third quarter of fiscal ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1A. RISK FACTORS

We disclosed our risk factors in our Annual Report on Form 10-K for the fiscal year ended April ~~25, 2020.~~24, 2021. There have been no material changes to our risk factors during the first nine months of fiscal ~~2021.~~2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Our board of directors has authorized the ~~purchase~~repurchase of company stock. ~~During~~With respect to the ~~fourth~~third quarter of fiscal ~~2019,~~2022, pursuant to the existing board authorization, we adopted a plan to ~~purchase~~repurchase company stock pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The plan was effective ~~December 14, 2020.~~October 25, 2021. Under this plan, our broker has the authority to ~~purchase~~repurchase company shares on our behalf, subject to SEC regulations and the price, market volume and timing constraints specified in the plan. The plan expires at the close of business on ~~March 19,~~November 26, 2021. We spent ~~$0.9~~$25.0 million in the third quarter of fiscal ~~2021~~2022 to ~~purchase less than 0.1~~repurchase 0.7 million ~~shares.~~shares, pursuant to the plan and discretionary purchases. As of January ~~23, 2021, 4.5~~22, 2022, 7.9 million shares remained available for ~~purchase~~repurchase pursuant to ~~this~~the board authorization. With the operating cash flows we anticipate generating in fiscal ~~2021,~~2022, we expect to continue ~~being opportunistic in purchasing~~repurchasing company stock.

The following table summarizes our ~~purchases~~repurchases of company stock during the quarter ended January ~~23, 2021:~~22, 2022:

(Unaudited, amounts in thousands, except per share data) Total number of
shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plan (2) Maximum number of shares that may yet be purchased under the plan
Fiscal November (October 25– November 28, 2020) — $ 36.07 — 4,524
Fiscal December (November 29 – December 26, 2020) 8 $ 39.48 8 4,516
Fiscal January (December 27 – January 23, 2021) 15 $ 39.89 14 4,502
Fiscal Third Quarter of 2021 23 $ 39.74 22 4,502


(Unaudited, amounts in thousands, except per share data)	Total number of shares repurchased (1)	Average price paid per share		Total number of shares repurchased as part of publicly announced plan (2)	Maximum number of shares that may yet be repurchased under the plan
Fiscal November (October 24 – November 27, 2021)	424	$	35.41	424	8,168
Fiscal December (November 28 – December 25, 2021)	279	35.80		279	7,889
Fiscal January (December 26 – January 22, 2022)	—	36.10		—	7,889
Fiscal Third Quarter of 2022	703	$	35.56	703	7,889

(1) In addition to the ~~22,050~~702,713 shares we ~~purchased~~repurchased during the quarter as part of our publicly announced, board-authorized plan described above, this column includes ~~710~~330 shares ~~purchased~~repurchased from employees to satisfy their withholding tax obligations upon vesting of restricted and performance based shares.

(2) On October 28, 1987, our board of directors announced the authorization of the plan to repurchase company stock. The plan originally authorized 1.0 million shares, and since October 1987, ~~27.0~~33.5 million shares have been added to the plan for ~~repurchase.~~repurchase, including 6.5 million shares approved by the company's board of directors on August 17, 2021. The authorization has no expiration date.

ITEM 6. EXHIBITS


Exhibit Number						Description

(31.1)						Certifications of Chief Executive Officer pursuant to Rule ~~13a14(a)~~13a-14(a)
(31.2)						Certifications of Chief Financial Officer pursuant to Rule ~~13a14(a)~~13a-14(a)
(32)						Certifications of Executive Officers pursuant to 18 U.S.C. Section 1350(b)
(101.INS)						Inline XBRL Instance Document
(101.SCH)						Inline XBRL Taxonomy Extension Schema Document
(101.CAL)						Inline XBRL Taxonomy Extension Calculation Linkbase Document
(101.LAB)						Inline XBRL Taxonomy Extension Label Linkbase Document
(101.PRE)						Inline XBRL Taxonomy Extension Presentation Linkbase Document
(101.DEF)						Inline XBRL Taxonomy Extension Definition Linkbase Document
(104)						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended January ~~23, 2021,~~22, 2022, formatted in Inline XBRL (included in Exhibit 101)

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			LA-Z-BOY INCORPORATED
			(Registrant)


Date: February ~~16, 2021~~15, 2022


			BY:~~/s/Lindsay A. Barnes~~ /s/ Jennifer L. McCurry
			~~Lindsay A. Barnes~~Jennifer L. McCurry Vice President, Corporate Controller and Chief Accounting Officer ~~and Treasurer~~


	Quarter Ended January 23, 2021								Quarter Ended January 25, 2020
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture	$	205,522	$	102,111	$	174	$	307,807	$	212,079	$	100,662	$	104	$	312,845
Stationary Upholstery Furniture	89,059		30,469		35,728		155,256		100,560		33,348		28,990		162,898
Bedroom Furniture	10,269		1,723		2,622		14,614		7,772		1,517		1,842		11,131
Dining Room Furniture	7,034		3,340		672		11,046		5,981		3,040		596		9,617
Occasional Furniture	11,585		6,118		623		18,326		12,002		6,148		516		18,666
Other (1)	27,239		22,198		(6,128)		43,309		26,417		22,779		(6,379)		42,817
Total	$	350,708	$	165,959	$	33,691	$	550,358	$	364,811	$	167,494	$	25,669	$	557,974

Eliminations							(80,162)								(82,118)
Consolidated Net Sales							$	470,196							$	475,856

	Nine Months Ended January 23, 2021								Nine Months Ended January 25, 2020
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture	$	538,234	$	255,020	$	397	$	793,651	$	588,820	$	270,301	$	264	$	859,385
Stationary Upholstery Furniture	240,052		79,104		88,225		407,381		294,572		96,306		79,213		470,091
Bedroom Furniture	25,818		4,141		6,149		36,108		24,711		4,513		4,800		34,024
Dining Room Furniture	18,455		7,957		2,173		28,585		17,656		8,036		1,436		27,128
Occasional Furniture	32,236		14,879		2,158		49,273		35,071		16,728		1,374		53,173
Other (1)	62,502		58,270		(14,953)		105,819		74,777		63,010		(16,555)		121,232
Total	$	917,297	$	419,371	$	84,149	$	1,420,817	$	1,035,607	$	458,894	$	70,532	$	1,565,033

Eliminations							(206,043)								(228,332)
Consolidated Net Sales							$	1,214,774							$	1,336,701


(Unaudited, amounts in thousands, except per share data)	Total number of shares purchased (1)	Average price paid per share		Total number of shares purchased as part of publicly announced plan (2)	Maximum number of shares that may yet be purchased under the plan
Fiscal November (October 25– November 28, 2020)	—	$	36.07	—	4,524
Fiscal December (November 29 – December 26, 2020)	8	$	39.48	8	4,516
Fiscal January (December 27 – January 23, 2021)	15	$	39.89	14	4,502
Fiscal Third Quarter of 2021	23	$	39.74	22	4,502