Company Quick10K Filing
Bassett Furniture
Price14.21 EPS1
Shares10 P/E25
MCap149 P/FCF66
Net Debt-12 EBIT7
TEV137 TEV/EBIT19
TTM 2019-06-01, in MM, except price, ratios
10-Q 2020-05-30 Filed 2020-07-09
10-Q 2020-02-29 Filed 2020-04-02
10-K 2019-11-30 Filed 2020-01-23
10-Q 2019-08-31 Filed 2019-10-03
10-Q 2019-06-01 Filed 2019-07-02
10-Q 2019-03-02 Filed 2019-04-04
10-K 2018-11-24 Filed 2019-01-17
10-Q 2018-08-25 Filed 2018-09-27
10-Q 2018-05-26 Filed 2018-06-28
10-Q 2018-02-24 Filed 2018-03-28
10-K 2017-11-25 Filed 2018-01-18
10-Q 2017-08-26 Filed 2017-09-28
10-Q 2017-05-27 Filed 2017-06-29
10-Q 2017-02-25 Filed 2017-03-30
10-K 2016-11-26 Filed 2017-01-19
10-Q 2016-08-27 Filed 2016-09-29
10-Q 2016-05-28 Filed 2016-06-30
10-Q 2016-02-27 Filed 2016-03-31
10-K 2015-11-28 Filed 2016-01-21
10-Q 2015-08-29 Filed 2015-10-01
10-Q 2015-05-30 Filed 2015-07-01
10-Q 2015-02-28 Filed 2015-04-09
10-K 2014-11-29 Filed 2015-01-22
10-Q 2014-08-30 Filed 2014-10-02
10-Q 2014-05-31 Filed 2014-07-02
10-Q 2014-03-01 Filed 2014-04-03
10-K 2013-11-30 Filed 2014-01-23
10-Q 2013-08-31 Filed 2013-10-03
10-Q 2013-06-01 Filed 2013-07-09
10-Q 2013-03-02 Filed 2013-04-04
10-K 2012-11-24 Filed 2013-02-04
10-Q 2012-08-25 Filed 2012-10-04
10-Q 2012-05-26 Filed 2012-07-05
10-Q 2012-02-25 Filed 2012-04-05
10-K 2011-11-26 Filed 2012-02-03
10-Q 2011-08-27 Filed 2011-10-06
10-Q 2011-05-28 Filed 2011-07-07
10-Q 2011-02-26 Filed 2011-04-12
10-K 2010-11-27 Filed 2011-02-03
10-Q 2010-08-28 Filed 2010-10-07
10-Q 2010-05-29 Filed 2010-07-08
10-Q 2010-02-27 Filed 2010-04-08
10-K 2009-11-28 Filed 2010-02-12
8-K 2020-07-31
8-K 2020-07-16 Exhibits
8-K 2020-07-09 Exhibits
8-K 2020-05-11
8-K 2020-04-24
8-K 2020-04-02
8-K 2020-03-31
8-K 2020-03-31
8-K 2020-03-23
8-K 2020-03-12
8-K 2020-03-11
8-K 2020-02-21
8-K 2020-01-23
8-K 2020-01-16
8-K 2020-01-15
8-K 2019-10-10
8-K 2019-10-03
8-K 2019-09-04
8-K 2019-07-18
8-K 2019-07-02
8-K 2019-04-04
8-K 2019-03-07
8-K 2019-03-06
8-K 2019-01-17
8-K 2019-01-17
8-K 2019-01-16
8-K 2018-10-04
8-K 2018-09-27
8-K 2018-07-12
8-K 2018-06-28
8-K 2018-03-28
8-K 2018-03-08
8-K 2018-03-07
8-K 2018-03-07
8-K 2018-03-07
8-K 2018-01-18
8-K 2018-01-11

BSET 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk:
Item 4. Controls and Procedures:
Part II - Other Information Bassett Furniture Industries Incorporated and Subsidiaries May 30, 2020 (Dollars in Thousands Except Share and per Share Data)
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
Item 3. Defaults Upon Senior Securities
Item 6. Exhibits
EX-4 ex_191767.htm
EX-31.A ex_192907.htm
EX-31.B ex_192908.htm
EX-32.A ex_192909.htm
EX-32.B ex_192910.htm

Bassett Furniture Earnings 2020-05-30

Balance SheetIncome StatementCash Flow
2952361771185902012201420172020
Assets, Equity
12599744924-12012201420172020
Rev, G Profit, Net Income
25131-11-23-352012201420172020
Ops, Inv, Fin

bset20200530_10q.htm
0000010329 BASSETT FURNITURE INDUSTRIES INC false --11-28 Q2 2020 8 1,971 11,114 6,239 1,070 1,050 1 1 5 1 10 3 1 Included in property & equipment, net in our condensed consolidated balance sheet. Included in other current liabilites and accrued expenses in our condensed consolidated balance sheet. Due to the net loss, the potentially dilutive securities would have been anti-dilutive and are therefore excluded. Beginning with the third quarter of fiscal 2019, our wholesale segment no longer purchases accessory items for resale to our retail segment or to third party customers such as licensees or independent furniture retailers. Our retail segment and third party customers now source their accessory items directly from the accessory vendors. 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended May 30, 2020

 

OR

 

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________________________ to _______________________

 

Commission File No. 000-00209

 

BASSETT FURNITURE INDUSTRIES, INCORPORATED

(Exact name of Registrant as specified in its charter)

 

  Virginia                                   54-0135270  
  (State or other jurisdiction (I.R.S. Employer  
  of incorporation or organization) Identification No.)  

     

3525 Fairystone Park Highway

Bassett, Virginia 24055

(Address of principal executive offices)

(Zip Code)

 

(276) 629-6000

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of exchange on which registered

Common Stock ($5.00 par value)

 

BSET

 

NASDAQ

 

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, 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 ☒

 

At June 29, 2020, 9,995,356 shares of common stock of the Registrant were outstanding.

 

1 of 40

 

 

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

 

TABLE OF CONTENTS

                         

ITEM PAGE

 

PART I - FINANCIAL INFORMATION
     
1.

Condensed Consolidated Financial Statements as of May 30, 2020 (unaudited) and November 30, 2019 and for the three and six months ended May 30, 2020 (unaudited) and June 1, 2019 (unaudited)

 

     
 

Condensed Consolidated Statements of Operations

3

     
 

Condensed Consolidated Statements of Comprehensive Income (Loss)

4

     
 

Condensed Consolidated Balance Sheets

5

     
 

Condensed Consolidated Statements of Cash Flows

6

     
 

Notes to Condensed Consolidated Financial Statements

7

     
2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

25

     
3.

Quantitative and Qualitative Disclosures About Market Risk

36

     
4.

Controls and Procedures

37

     
 

PART II - OTHER INFORMATION

     
1.

Legal Proceedings

38

     
1A.

Risk Factors

38

     
2.

Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

38

     
3.

Defaults Upon Senior Securities

38

     
6.

Exhibits

39

 

2 of 40

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE PERIODS ENDED MAY 30, 2020 AND JUNE 1, 2019 – UNAUDITED

(In thousands except per share data)

 

 

   

Quarter Ended

   

Six Months Ended

 
                                 
   

May 30, 2020

   

June 1, 2019

   

May 30, 2020

   

June 1, 2019

 

Sales revenue:

                               

Furniture and accessories

  $ 53,000     $ 95,824     $ 151,942     $ 203,181  

Logistics

    10,801       12,366       23,979       25,850  

Total sales revenue

    63,801       108,190       175,921       229,031  
                                 

Cost of furniture and accessories sold

    29,452       42,530       74,722       91,707  
                                 

Selling, general and administrative expenses excluding new store pre-opening costs

    50,373       64,590       115,013       133,976  

New store pre-opening costs

    -       369       -       863  

Asset impairment charges

    12,184       -       12,184       -  

Goodwill impairment charge

    1,971       -       1,971       -  

Litigation expense

    1,050       -       1,050       -  

Early retirement program

    -       -       -       835  

Income (loss) from operations

    (31,229 )     701       (29,019 )     1,650  
                                 

Other loss, net

    (765 )     (145 )     (1,127 )     (268 )

Income (loss) before income taxes

    (31,994 )     556       (30,146 )     1,382  
                                 

Income tax expense (benefit)

    (11,642 )     111       (11,004 )     329  
                                 

Net income (loss)

  $ (20,352 )   $ 445     $ (19,142 )   $ 1,053  
                                 

Basic earnings (loss) per share

  $ (2.04 )   $ 0.04     $ (1.92 )   $ 0.10  
                                 

Diluted earnings (loss) per share

  $ (2.04 )   $ 0.04     $ (1.92 )   $ 0.10  
                                 

Dividends per share

  $ 0.125     $ 0.125     $ 0.125     $ 0.25  

 

 

The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.

 

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PART I – FINANCIAL INFORMATION – CONTINUED

ITEM 1. FINANCIAL STATEMENTS

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE PERIODS ENDED MAY 30, 2020 AND JUNE 1, 2019 – UNAUDITED

(In thousands)

 

 

   

Quarter Ended

   

Six Months Ended

 
                                 
   

May 30, 2020

   

June 1, 2019

   

May 30, 2020

   

June 1, 2019

 
                                 

Net income (loss)

  $ (20,352 )   $ 445     $ (19,142 )   $ 1,053  

Other comprehensive income:

                               

Amortization associated with

                               

Long Term Cash Awards (LTCA)

    31       31       63       62  

Income taxes related to LTCA

    (8 )     (8 )     (16 )     (16 )

Amortization associated with supplemental executive retirement defined benefit plan (SERP)

    2       46       3       92  

Income taxes related to SERP

    -       (12 )     (1 )     (24 )
                                 

Other comprehensive income, net of tax

    25       57       49       114  
                                 

Total comprehensive income (loss)

  $ (20,327 )   $ 502     $ (19,093 )   $ 1,167  

 

 

The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.

 

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PART I – FINANCIAL INFORMATION – CONTINUED

ITEM 1. FINANCIAL STATEMENTS

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

MAY 30, 2020AND NOVEMBER 30, 2019

(In thousands)

 

   

(Unaudited)

         

 

 

May 30,

2020

   

November 30,

2019

 
Assets                

Current assets

               

Cash and cash equivalents

  $ 11,435     $ 19,687  

Short-term investments

    17,673       17,436  

Accounts receivable, net

    17,799       21,378  

Inventories

    62,483       66,302  

Recoverable income taxes

    11,321       329  

Other current assets

    8,432       11,654  

Total current assets

    129,143       136,786  
                 

Property and equipment, net

    91,128       101,724  
                 

Deferred income taxes

    7,550       5,744  

Goodwill and other intangible assets

    24,016       26,176  

Right of use assets under operating leases

    130,042       -  

Other

    5,094       5,336  

Total long-term assets

    166,702       37,256  

Total assets

  $ 386,973     $ 275,766  
                 

Liabilities and Stockholders’ Equity

               

Current liabilities

               

Accounts payable

  $ 14,286     $ 23,677  

Accrued compensation and benefits

    12,090       11,308  

Customer deposits

    23,191       25,341  

Dividends payable

    1,249       -  

Current portion operating lease obligations

    29,009       -  

Other current liabilities and accrued expenses

    15,982       11,945  

Total current liabilities

    95,807       72,271  
                 

Long-term liabilities

               

Post employment benefit obligations

    11,817       11,830  

Long-term portion of operating lease obligations

    126,036       -  

Other long-term liabilities

    1,132       12,995  

Total long-term liabilities

    138,985       24,825  
                 
                 

Stockholders’ equity

               

Common stock

    49,977       50,581  

Retained earnings

    103,391       129,130  

Additional paid-in capital

    -       195  

Accumulated other comprehensive loss

    (1,187 )     (1,236 )

Total stockholders' equity

    152,181       178,670  

Total liabilities and stockholders’ equity

  $ 386,973     $ 275,766  

 

The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.

 

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PART I – FINANCIAL INFORMATION – CONTINUED

ITEM 1. FINANCIAL STATEMENTS

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED MAY 30, 2020 AND JUNE 1, 2019 – UNAUDITED

(In thousands)

 

 

   

Six Months Ended

 
   

May 30, 2020

   

June 1, 2019

 

Operating activities:

               

Net income (loss)

  $ (19,142 )   $ 1,053  

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

               

Depreciation and amortization

    7,239       6,735  

Gain on lease modification

    (152 )     -  

(Gain) loss on sale of property and equipment

    39       (3 )

Asset impairment charges

    12,184       -  

Goodwill impairment charge

    1,971       -  

Inventory valuation charges

    2,936       1,274  

Bad debt valuation charges (recoveries)

    1,074       (27 )

Deferred income taxes

    (521 )     23  

Other, net

    634       (276 )

Changes in operating assets and liabilities:

               

Accounts receivable

    2,483       (1,797 )

Inventories

    883       (4,629 )

Other current assets

    (9,091 )     (3,274 )

Right of use assets under operating leases

    14,810       -  

Customer deposits

    (2,150 )     (2,247 )

Accounts payable and other liabilities

    (2,670 )     (5,774 )

Obligations under operating leases

    (16,274 )     -  

Net cash used in operating activities

    (5,747 )     (8,942 )
                 

Investing activities:

               

Purchases of property and equipment

    (1,791 )     (8,313 )

Proceeds from sales of property and equipment

    2,345       11  

Purchases of investments

    (241 )     -  

Other

    (211 )     343  

Net cash provided by (used in) investing activities

    102       (7,959 )
                 

Financing activities:

               

Cash dividends

    (1,258 )     (2,603 )

Proceeds from the exercise of stock options

    -       25  

Other issuance of common stock

    157       159  

Repurchases of common stock

    (1,241 )     (2,347 )

Taxes paid related to net share settlement of equity awards

    (215 )     -  

Repayments of finance lease obligations

    (50 )     -  

Repayments of notes payable

    -       (220 )

Net cash used in financing activities

    (2,607 )     (4,986 )

Change in cash and cash equivalents

    (8,252 )     (21,887 )

Cash and cash equivalents - beginning of period

    19,687       33,468  

Cash and cash equivalents - end of period

  $ 11,435     $ 11,581  

 

The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.

 

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PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

 

 

1. Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

 

References to “ASC” included hereinafter refer to the Accounting Standards Codification established by the Financial Accounting Standards Board (“FASB”) as the source of authoritative GAAP.

 

The condensed consolidated financial statements include the accounts of Bassett Furniture Industries, Incorporated (“Bassett”, “we”, “our”, or the “Company”) and our wholly-owned subsidiaries of which we have a controlling interest. In accordance with ASC Topic 810, we have evaluated our licensees and certain other entities to determine whether they are variable interest entities (“VIEs”) of which we are the primary beneficiary and thus would require consolidation in our financial statements. To date we have concluded that none of our licensees nor any other of our counterparties represent VIEs.

 

Revenue from the sale of furniture and accessories is reported in the accompanying condensed consolidated statements of operations net of estimates for returns and allowances.

 

Revenues from logistical services are generated by our wholly-owned subsidiary, Zenith Freight Lines, LLC (“Zenith”). Sales of logistical services from Zenith to our wholesale and retail segments have been eliminated in consolidation, and Zenith’s operating costs and expenses are included in selling, general and administrative expenses in our condensed consolidated statements of operations.

 

Our fiscal year, which ends on the last Saturday of November, periodically results in a 53-week year instead of the normal 52 weeks. The prior fiscal year ending November 30, 2019 was a 53-week year, with the additional week being included in the first fiscal quarter of 2019. Accordingly, the information presented below includes 26 weeks of operations for the six months ended May 30, 2020 as compared with 27 weeks included in the six months ended June 1, 2019.

 

Recently Adopted Accounting Pronouncements

 

Effective as of the beginning of fiscal 2020, we have adopted Accounting Standards Update No. 2016-02, Leases (Topic 842). The guidance in ASU 2016-02 (as subsequently amended by ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20) requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. We have adopted this standard using the modified retrospective approach. Refer to Note 11, Leases, for more information regarding our leases and the adoption of the new standard.

 

Impact of the COVID-19 Pandemic Upon our Financial Condition and Results of Operations

 

On March 11, 2020, the World Health Organization declared the current coronavirus (“COVID-19”) outbreak to be a global pandemic. In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country have imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. These measures have had a significant adverse impact upon many sectors of the economy, including non-essential retail commerce.

 

In response to these measures and for the protection of our employees and customers, we temporarily closed our dedicated stores, our manufacturing locations and many of our warehouses for several weeks during the second fiscal quarter of 2020. While as of May 30, 2020, we had reopened most of our stores and resumed manufacturing and shipping activities, the extended period of suspended operations has had a material adverse impact upon our results of operations for the three and six months ended May 30, 2020. In addition to operating losses resulting from severely reduced sales volumes, we also recorded charges for goodwill impairment (Note 6) as well as for the impairment of certain other long-lived assets (Note 9).

 

Whereas most state and local governments have begun to ease restrictions on commercial retail activity, it is possible that a resurgence in COVID-19 cases could prompt a return to tighter restrictions in certain areas of the county. Furthermore, the economic recession brought on by the pandemic may have a continuing adverse impact on consumer demand for our products. Therefore, significant uncertainty remains regarding the ongoing impact of the COVID-19 outbreak upon our financial condition and future results of operations, as well as upon the significant estimates and assumptions we utilize in reporting certain assets and liabilities.

 

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PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

 

2. Interim Financial Presentation

 

All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. The results of operations for the three and six months ended May 30, 2020 are not necessarily indicative of results for the full fiscal year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended November 30, 2019.

 

Income Taxes

 

We calculate an anticipated effective tax rate for the year based on our annual estimates of pretax income and use that effective tax rate to record our year-to-date income tax provision.  Any change in annual projections of pretax income could have a significant impact on our effective tax rate for the respective quarter.

 

On March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. A major provision of the CARES Act allows net operating losses from the 2018, 2019 and 2020 tax years to be carried back up to five years. As a result, our effective tax rates for the three and six months ended May 30, 2020 were (36.4%) and (36.5%), respectively, which differ from the federal statutory rate of 21% primarily due to the effects of carrying back our current net operating loss to tax years in which the federal statutory rate was 35%, and to the effects of state income taxes and various permanent differences. Our effective tax rates for the three and six months ended June 1, 2019 were 20.0% and 23.8%, respectively, and differ from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences, including the recognition of non-taxable proceeds from Company-owned life insurance.

 

 

3. Financial Instruments and Fair Value Measurements

 

Financial Instruments

 

Our financial instruments include cash and cash equivalents, short-term investments in certificates of deposit, accounts receivable, and accounts payable. Because of their short maturities, the carrying amounts of cash and cash equivalents, short-term investments in certificates of deposit, accounts receivable, and accounts payable approximate fair value.

 

Investments

 

Our short-term investments of $17,673 at May 30, 2020 and $17,436 at November 30, 2019 consisted of certificates of deposit (CDs). At May 30, 2020, the CDs had original terms averaging eight months, bearing interest at rates ranging from 0.30% to 2.00%. At May 30, 2020, the weighted average remaining time to maturity of the CDs was approximately three months and the weighted average yield of the CDs was approximately 1.19%. Each CD is placed with a federally insured financial institution and all deposits are within federal deposit insurance limits. Due to the nature of these investments and their relatively short maturities, the carrying amount of the short-term investments at May 30, 2020 and November 30, 2019 approximates their fair value.

 

Fair Value Measurement 

 

The Company accounts for items measured at fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

 

Level 1 Inputs– Quoted prices for identical instruments in active markets.

 

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PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

Level 2 Inputs– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

 

Level 3 Inputs– Instruments with primarily unobservable value drivers.

 

 

We believe that the carrying amounts of our current assets and current liabilities approximate fair value due to the short-term nature of these items. Our primary non-recurring fair value estimates typically involve business acquisitions or the impairment of long-lived assets (see Note 6 regarding the impairment of goodwill, Note 9 regarding the impairment of certain long-lived assets and Note 11 regarding the impairment of lease right-of-use assets upon adoption of ASC Topic 842) which involve a combination of Level 2 and Level 3 inputs.

 

 

4. Accounts Receivable

 

Accounts receivable consists of the following:

 

   

May 30,

2020

   

November 30,

2019

 

Gross accounts receivable

  $ 19,500     $ 22,193  

Allowance for doubtful accounts

    (1,701 )     (815 )

Accounts receivable, net

  $ 17,799     $ 21,378  

 

 

Activity in the allowance for doubtful accounts for the six months ended May 30, 2020 was as follows:

 

Balance at November 30, 2019

  $ 815  

Additions charged to expense

    1,074  

Write-offs against allowance

    (188 )

Balance at May 30, 2020

  $ 1,701  

 

We believe that the carrying value of our net accounts receivable approximates fair value. The inputs into these fair value estimates reflect our market assumptions and are not observable. Consequently, the inputs are considered to be Level 3 as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosures. See Note 3.

 

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PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

 

5. Inventories

 

Domestic furniture inventories are valued at the lower of cost, which is determined using the last-in, first-out (LIFO) method, or market. Imported inventories and those applicable to our Lane Venture and Bassett Outdoor lines are valued at the lower of cost, which is determined using the first-in, first-out (FIFO) method, or net realizable value.

 

Inventories were comprised of the following:

 

   

May 30,

2020

   

November 30,

2019

 

Wholesale finished goods

  $ 27,532     $ 27,792  

Work in process

    441       733  

Raw materials and supplies

    17,173       17,293  

Retail merchandise

    30,873       31,534  

Total inventories on first-in, first-out method

    76,019       77,352  

LIFO adjustment

    (8,836 )     (8,688 )

Reserve for excess and obsolete inventory

    (4,700 )     (2,362 )
    $ 62,483     $ 66,302  

 

We estimate an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand, market conditions and the respective valuations at LIFO. The need for these reserves is primarily driven by the normal product life cycle. As products mature and sales volumes decline, we rationalize our product offerings to respond to consumer tastes and keep our product lines fresh. If actual demand or market conditions in the future are less favorable than those estimated, additional inventory write-downs may be required. In determining reserves, we calculate separate reserves on our wholesale and retail inventories. Our wholesale inventories tend to carry the majority of the reserves for excess quantities and obsolete inventory due to the nature of our distribution model. These wholesale reserves primarily represent design and/or style obsolescence. Typically, product is not shipped to our retail warehouses until a consumer has ordered and paid a deposit for the product. We do not typically hold retail inventory for stock purposes. Consequently, floor sample inventory and inventory for delivery to customers account for the majority of our inventory at retail. Retail reserves are based on accessory and clearance floor sample inventory in our stores and any inventory that is not associated with a specific customer order in our retail warehouses.

 

Activity in the reserves for excess quantities and obsolete inventory by segment are as follows:

 

   

Wholesale

Segment

   

Retail Segment

   

Total

 
                         

Balance at November 30, 2019

  $ 2,054     $ 308     $ 2,362  

Additions charged to expense

    2,532       404       2,936  

Write-offs

    (579 )     (19 )     (598 )

Balance at May 30, 2020

  $ 4,007     $ 693     $ 4,700  

 

Our estimates and assumptions have been reasonably accurate in the past. We have not made any significant changes to our methodology for determining inventory reserves in 2020 and do not anticipate that our methodology is likely to change in the future.

 

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PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

 

6. Goodwill and Other Intangible Assets

 

Goodwill and other intangible assets consisted of the following:

 

   

May 30, 2020

 
   

Gross

Carrying

Amount

   

Accumulated Amortization

   

Intangible

Assets, Net

 

Intangibles subject to amortization

                       

Customer relationships

  $ 3,550     $ (1,217 )   $ 2,333  

Technology - customized applications

    834       (635 )     199  
                         

Total intangible assets subject to amortization

  $ 4,384     $ (1,852 )     2,532  
                         

Intangibles not subject to amortization:

                       

Trade names

                    9,338  

Goodwill

                    12,146  
                         

Total goodwill and other intangible assets

                  $ 24,016  

 

   

November 30, 2019

 
   

Gross

Carrying

Amount

   

Accumulated Amortization

   

Intangible

Assets, Net

 

Intangibles subject to amortization

                       

Customer relationships

  $ 3,550     $ (1,088 )   $ 2,462  

Technology - customized applications

    834       (575 )     259  
                         

Total intangible assets subject to amortization

  $ 4,384     $ (1,663 )     2,721  
                         

Intangibles not subject to amortization:

                       

Trade names

                    9,338  

Goodwill

                    14,117  
                         

Total goodwill and other intangible assets

                  $ 26,176  

 

We normally test the carrying amount of our goodwill on an annual basis as of the beginning of our fourth quarter, the most recent annual test having been performed as of September 1, 2019 which resulted in the full impairment of the goodwill previously allocated to our retail reporting unit. Due to the impact of the COVID-19 pandemic, we performed an interim impairment assessment of our remaining goodwill as of May 30, 2020. In accordance with ASC Topic 350, Intangibles – Goodwill & Other (“ASC Topic 350”), we first assessed qualitative factors to determine whether it was more likely than not that the fair value of our reporting units was less than their carrying amounts as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test described in ASC Topic 350. The more likely than not threshold is defined as having a likelihood of more than 50 percent. Based on our qualitative assessment as described above, we concluded that it was necessary to perform the quantitative evaluation for the wood reporting unit in the current quarter. As a result of this test, we concluded that the carrying value of our wood reporting unit exceeded its fair value by an amount in excess of the goodwill previously allocated to the reporting unit. Therefore, we recognized a goodwill impairment charge of $1,971 for the three and six months ended May 30, 2020. The determination of the fair value of our wood reporting unit was primarily based on an income approach that utilized discounted cash flows for the reporting unit and other Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosure (see Note 3). Under the income approach, we determined fair value based on the present value of the most recent cash flow projections for the reporting unit as of the date of the analysis and calculated a terminal value utilizing a terminal growth rate. The significant assumptions under this approach included, among others: income projections, which are dependent on future sales, new product introductions, customer behavior, competitor pricing, operating expenses, the discount rate, and the terminal growth rate. The cash flows used to determine fair value were dependent on a number of significant management assumptions such as our expectations of future performance and the expected future economic environment, which are partly based upon our historical experience as well as our estimate of the period of time required to recover from the impact of the COVID-19 pandemic. Our estimates are subject to change given the inherent uncertainty in predicting future results, including uncertainties surrounding the continuing impact of COVID-19 upon consumer spending and our ability to keep our retail store locations open to the public. Additionally, the discount rate and the terminal growth rate are based on our judgment of the rates that would be utilized by a hypothetical market participant.

 

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PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

Changes in the carrying amounts of goodwill by reportable segment are as follows:

 

   

Wholesale

   

Retail

   

Logistics

   

Total

 
                                 

Balance as of November 30, 2019

  $ 9,188     $ -     $ 4,929     $ 14,117  

Goodwill impairment

    (1,971 )     -       -       (1,971 )
                                 

Balance as of May 30, 2020

  $ 7,217     $ -     $ 4,929     $ 12,146  

 

The carrying amounts of our goodwill at May 30, 2020 and November 30, 2019 included the following accumulated impairment losses:

 

   

Wholesale

   

Retail

   

Logistics

   

Total

 
                                 

Balance as of November 30, 2019

  $ -     $ 1,926     $ -     $ 1,926  
                                 

Balance as of May 30, 2020

  $ 1,971     $ 1,926     $ -     $ 3,897  

 

Amortization expense associated with intangible assets during the three and six months ended May 30, 2020 and June 1, 2019 was as follows:

 

   

Quarter Ended

   

Six Months Ended

 
   

May 30, 2020

   

June 1, 2019

   

May 30, 2020

   

June 1, 2019

 
                                 

Intangible asset amortization expense

  $ 95     $ 95     $ 189     $ 190  

 

Estimated future amortization expense for intangible assets that exist at May 30, 2020 is as follows:

 

Remainder of fiscal 2020

  $ 189  

Fiscal 2021

    379  

Fiscal 2022

    279  

Fiscal 2023

    259  

Fiscal 2024

    259  

Fiscal 2025

    259  

Thereafter

    908  
         

Total

  $ 2,532  

 

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PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

 

7. Bank Credit Facility

 

Bank Credit Facility

 

Our existing credit facility with our bank as of May 30, 2020 provides for a line of credit of up to $25,000. At May 30, 2020, we had $4,773 outstanding under standby letters of credit against our line, leaving availability under our credit line of $20,227. In addition, we have outstanding standby letters of credit with another bank totaling $325. Effective June 15, 2020, we executed an amended credit facility with our bank to increase the maximum amount available under our credit line to $50,000 through December 31, 2020, after which date the maximum availability will return to the original amount of $25,000. The line bears interest at the rate of LIBOR plus 1.9%, with a fee of 0.25% charged for the unused portion of the line and is secured by a general lien on our accounts receivable and inventory. In addition, all covenants based on financial ratios have been waived for the remainder of fiscal 2020, and the maturity of the facility was extended from December 5, 2021 to January 31, 2022.

 

 

8. Post Employment Benefit Obligations

 

Defined Benefit Plans

 

We have an unfunded Supplemental Retirement Income Plan (the “Supplemental Plan”) that covers one current and certain former executives. The liability for the Supplemental Plan was $8,695 and $8,779 as of May 30, 2020 and November 30, 2019, respectively.

 

We also have the Bassett Furniture Industries, Incorporated Management Savings Plan (the “Management Savings Plan”) which was established in the second quarter of fiscal 2017. The Management Savings Plan is an unfunded, nonqualified deferred compensation plan maintained for the benefit of certain highly compensated or management level employees. As part of the Management Savings Plan, we have made Long Term Cash Awards (“LTC Awards”) totaling $2,000 to certain management employees in the amount of $400 each. The liability for the LTC Awards was $1,366 and $1,311 as of May 30, 2020 and November 30, 2019, respectively.

 

The combined pension liability for the Supplemental Plan and LTC Awards is recorded as follows in the condensed consolidated balance sheets:

 

   

May 30,

2020

   

November 30,

2019

 

Accrued compensation and benefits

  $ 655     $ 655  

Post employment benefit obligations

    9,406       9,435  
                 

Total pension liability

  $ 10,061     $ 10,090  

 

Components of net periodic pension costs for our defined benefit plans for the three and six months ended May 30, 2020 and June 1, 2019 are as follows:

 

   

Quarter Ended

   

Six Months Ended

 
   

May 30, 2020

   

June 1, 2019

   

May 30, 2020

   

June 1, 2019

 

Service cost

  $ 43     $ 47     $ 87     $ 94  

Interest cost

    67       110       134       221  

Amortization of prior service costs

    31       31       63       63  

Amortization of loss

    2       46       4       92  
                                 

Net periodic pension cost

  $ 143     $ 234     $ 288     $ 470  

 

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PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

The components of net periodic pension cost other than the service cost component are included in other loss, net in our condensed consolidated statements of operations.

 

Deferred Compensation Plans

 

We have an unfunded deferred compensation plan that covers one current executive and certain former executives and provides for voluntary deferral of compensation. This plan has been frozen with no additional participants or deferrals permitted. Our liability under this plan was $1,714 and $1,767 as of May 30, 2020 and November 30, 2019, respectively.

 

We also have an unfunded, nonqualified deferred compensation plan maintained for the benefit of certain highly compensated or management level employees which was established under the Management Savings Plan. Our liability under this plan, including both accrued Company contributions and participant salary deferrals, was $963 and $894 as of May 30, 2020 and November 30, 2019, respectively.

 

Our combined liability for all deferred compensation arrangements, including Company contributions and participant deferrals under the Management Savings Plan, is recorded as follows in the condensed consolidated balance sheets:

 

   

May 30,

2020

   

November 30,

2019

 

Accrued compensation and benefits

  $ 266     $ 266  

Post employment benefit obligations

    2,411       2,395  
                 

Total deferred compensation liability

  $ 2,677     $ 2,661  

 

 

We recognized expense under our deferred compensation arrangements during the three and six months ended May 30, 2020 and June 1, 2019 as follows:

 

   

Quarter Ended

   

Six Months Ended

 
   

May 30, 2020

   

June 1, 2019

   

May 30, 2020

   

June 1, 2019

 

Deferred compensation expense

  $ 198     $ 84     $ 294     $ 183  

 

 

 

9. Other Operating Losses

 

Fiscal 2020

 

Asset Impairment Charges

 

During the three and six months ended May 30, 2020 we recorded $11,114 of non-cash impairment charges on the assets of five underperforming retail stores, including $6,239 for the impairment of operating lease right-of-use assets associated with the leased locations. Our estimates of the fair value of the impaired right-of-use assets included estimates of discounted cash flows based upon current market rents and other inputs which we consider to be Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurement and Disclosure (see Note 3).

 

During the three and six months ended May 30, 2020 we incurred $1,070 of non-cash impairment charges in our wholesale segment, primarily due to the closing of our custom upholstery manufacturing facility in Grand Prairie, Texas, in May.

 

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PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousand

s except share and per share data

)

 

Litigation Expense

 

During the three and six months ended May 30, 2020 we accrued an additional $1,050 for the estimated costs to resolve certain wage and hour violation claims that have been asserted against the Company and have received class action designation, bringing our total recorded reserve for these claims to $1,750 at May 30, 2020, which is included in other current liabilities and accrued expenses in our accompanying balance sheet. While the ultimate cost of resolving these claims may be substantially higher, the amount accrued represents our estimate of the most likely outcome of a mediated settlement.

 

Fiscal 2019

 

Early Retirement Program

 

During the first quarter of fiscal 2019, we offered a voluntary early retirement package to certain eligible employees of the Company. These employees are to receive pay equal to one-half their current salary plus benefits over a period of one year from the final day of each individual’s active employment. Accordingly, we recognized a charge of $835 during the six months ended June 1, 2019. The unpaid balance of the obligation at May 30, 2020 and November 30, 2019 of $35 and $374, respectively, is included in other current liabilities and accrued expenses in our condensed consolidated balance sheets.

 

 

10. Commitments and Contingencies

 

We are involved in various legal and environmental matters, which arise in the normal course of business. Although the final outcome of these matters cannot be determined, based on the facts presently known, we believe that the final resolution of these matters will not have a material adverse effect on our financial position or future results of operations. See Note 9 regarding litigation arising from certain wage and hour violations which have been asserted against the Company.

 

 

11. Leases

 

During the first quarter of fiscal 2020, we adopted ASU 2016-02, Leases (Topic 842) and all related amendments. The guidance requires lessees to recognize substantially all leases on their balance sheet as a right-of-use (“ROU”) asset and a lease liability.

 

We lease land and buildings that are used in the operation of our Company-owned retail stores as well as in the operation of certain of our licensee-owned stores, and we lease land and buildings at various locations throughout the continental United States for warehousing and distribution hubs used in our retail and logistical services segments. We also lease tractors and trailers used in our logistical services segment, and local delivery trucks used in our retail segment. We determine if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all of the economic benefits from the use of that identified asset. Our real estate lease terms range from one to 15 years and generally have renewal options of between five and 15 years. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant economic and financial factors. Any options that meet this criteria are included in the lease term at lease commencement.

 

Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our ROU asset and lease liability, we determine our incremental borrowing rate by applying a spread above the U.S. Treasury borrowing rates. In the case an interest rate is implicit in a lease we will use that rate as the discount rate for that lease. Some of our leases contain variable rent payments based on a Consumer Price Index or percentage of sales. Due to the variable nature of these costs, they are not included in the measurement of the ROU asset and lease liability.

 

We adopted the standard utilizing the transition election to not restate comparative periods for the impact of adopting the standard and recognizing the cumulative impact of adoption in the opening balance of retained earnings. We elected the package of transition expedients available for expired or existing contracts, which allowed the carry-forward of historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.  In addition, we have elected the practical expedient to not separate lease and non-lease components when determining the ROU asset and lease liability and have elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements. We have also elected the hindsight practical expedient to determine the lease term for existing leases. In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term. We have made an accounting policy election to not recognize ROU assets and lease liabilities on the balance sheet for those leases with initial terms of one year or less and instead such lease obligations will be expensed on a straight-line basis over the lease term.

 

15 of 40

 

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

Adoption of the standard resulted in the recording of additional net lease-related assets and lease-related liabilities of $146,585 and $151,672, respectively, as of December 1, 2019. The difference between the additional lease assets and lease liabilities, net of the $1,302 deferred tax impact, was $3,785 and was recorded as an adjustment to retained earnings. This adjustment to retained earnings primarily represents the impairment of right-of-use assets associated with certain underperforming retail locations. Our estimates of the fair value of the impaired ROU assets included estimates of discounted cash flows based upon current market rents and other inputs which we consider to be Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurement and Disclosure (see Note 3). Our adoption of this standard did not have a material impact on our consolidated statements of operations, comprehensive income or cash flows.

 

We are currently in negotiations with a number of our lessors to obtain relief in the form of rent deferrals or abatements from rents currently due as a result of the effects of COVID-19 on our business. At May 30, 2020, the unpaid rent for the months of April and May subject to these negotiations totaled $4,470 and is included in other current liabilities and accrued expenses in our accompanying condensed consolidated balance sheet. In accordance with FASB Staff Q&A - Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic ("FASB Staff Q&A") issued in April 2020, we have elected to account for any lease concessions resulting directly from COVID-19 as if the enforceable rights and obligations for the concessions existed in the respective contracts at lease inception and as such we will not account for any concession as a lease modification. Guidance from the FASB Staff Q&A provided methods to account for rent deferrals which include the option to treat the lease as if no changes to the lease contract were made or to treat deferred payments as variable lease payments. The FASB Staff Q&A allows entities to select the most practical approach and does not require the same approach be applied consistently to all leases. As a result, we expect to account for the deferrals as if no changes to the lease contract were made and will continue to recognize lease expense, on a straight-line basis, during the deferral period. For any abatements received, we will account for those as variable rent in the period in which the abatement is granted.

 

Supplemental balance sheet information related to leases as of May 30, 2020 is as follows:

 

Operating leases:

       

Right of use assets

  $ 130,042  

Lease liabilties, short-term

    29,009  

Lease liabilties, long-term

    126,036  
         

Finance leases:

       

Right of use assets (1)

  $ 974  

Lease liabilties, short-term (2)

    155  

Lease liabilties, long-term (3)

    827  

 

 

(1)

Included in property & equipment, net in our condensed consolidated balance sheet.

 

(2)

Included in other current liabilites and accrued expenses in our condensed consolidated balance sheet.

 

(3)

Included in other long-term liabilites and accrued expenses in our condensed consolidated balance sheet.

 

16 of 40

 

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

Our right-of-use assets under operating leases by segment as of May 30, 2020 are as follows:

 

Wholesale

  $ 11,039  

Retail

    99,895  

Logistical services

    19,108  
         

Total right of use assets

  $ 130,042  

 

The components of our lease cost for the three and six months ended May 30, 2020 are as follows:

 

   

Quarter Ended

   

Six Months Ended

 
   

May 30, 2020

   

May 30, 2020

 

Lease cost:

               

Operating lease cost

  $ 8,792     $ 17,564  

Financing lease cost:

               

Amortization of right-of-use assets

    43       57  

Interest on lease liabilities

    12       16  

Short-term lease cost

    304       798  

Variable lease cost

    28       64  

Sublease income

    (394 )     (788 )
                 

Total lease cost

  $ 8,785     $ 17,711  

 

Supplemental lease disclosures as of May 30, 2020 and for the six months then ended are as follows:

 

   

Operating

   

Financing

 
                 

For the six months ended May 30, 2020:

               

Cash paid for amounts included in the measurements of lease liabilities

  $ 14,533     $ 57  

Lease liabilities arising from new right-of-use assets

    5,052       1,031  
                 

As of May 30, 2020:

               

Weighted average remaining lease terms (years)

    6.4       5.7  

Weighted average discount rates

    5.01 %     4.72 %

 

Future payments under our leases and the present value of the obligations as of May 30, 2020 are as follows:

 

   

Operating

Leases

   

Financing

Leases

 
                 

Remainder of fiscal 2020

  $ 18,530     $ 98  

Fiscal 2021

    34,079       197  

Fiscal 2022

    30,806       197  

Fiscal 2023

    25,626       197  

Fiscal 2024

    18,909       197  

Fiscal 2025

    15,626       197  

Thereafter

    38,351       33  

Total lease payments

    181,927       1,116  

Less: interest

    26,882       134  

Total lease obligations

  $ 155,045     $ 982  

 

17 of 40

 

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

We sublease a small number of our leased locations to our licensees for operation as BFH network stores. The terms of these leases generally match those of the lease we have with the lessor. Minimum future lease payments due to us under these subleases are as follows:

 

Remainder of fiscal 2020

  $ 699  

Fiscal 2021

    1,395  

Fiscal 2022

    1,429  

Fiscal 2023

    1,113  

Fiscal 2024

    1,007  

Fiscal 2025

    1,007  

Thereafter

    381  

Total minimum future rental income

  $ 7,031  

 

Lease Guarantees

 

We also have guaranteed certain lease obligations of licensee operators. Lease guarantees range from one to ten years. We were contingently liable under licensee lease obligation guarantees in the amount of $1,793 and $1,776 at May 30, 2020 and November 30, 2019, respectively.

 

In the event of default by an independent dealer under the guaranteed lease, we believe that the risk of loss is mitigated through a combination of options that include, but are not limited to, arranging for a replacement dealer or liquidating the collateral (primarily inventory). The proceeds of the above options are expected to cover the estimated amount of our future payments under the guarantee obligations, net of recorded reserves. The fair value of lease guarantees (an estimate of the cost to the Company to perform on these guarantees) at May 30, 2020 and November 30, 2019 was not material.

 

18 of 40

 

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

MAY 30, 2020

(Dollars in thousands except share and per share data)

 

 

12. Earnings (Loss) Per Share

 

 

The following reconciles basic and diluted earnings (loss) per share:

 

   

Net Income

(Loss)

   

Weighted Average

Shares

   

Net Income

(Loss) Per

Share

 

For the quarter ended May 30, 2020:

                       
                         

Basic loss per share

  $ (20,352 )     9,956,975     $ (2.04 )

Add effect of dilutive securities:

                       

Options and restricted shares*

    -       -       -  

Diluted loss per share

  $ (20,352 )     9,956,975     $ (2.04 )
                         

For the quarter ended June 1, 2019:

                       
                         

Basic earnings per share

  $ 445       10,433,492     $ 0.04  

Add effect of dilutive securities:

                       

Options and restricted shares

    -       26,329       -  

Diluted earnings per share

  $ 445       10,459,821     $ 0.04  
                         

For the six months ended May 30, 2020:

                       
                         

Basic loss per share

  $ (19,142 )     9,992,101     $ (1.92 )

Add effect of dilutive securities:

                       

Options and restricted shares*

    -       -       -  

Diluted loss per share

  $ (19,142 )     9,992,101     $ (1.92 )
                         

For the six months ended June 1, 2019:

                       
                         

Basic earnings per share

  $ 1,053       10,444,306     $ 0.10  

Add effect of dilutive securities:

                       

Options and restricted shares

    -       27,530       -  

Diluted earnings per share

  $ 1,053       10,471,836     $ 0.10  

 

*Due to the net loss, the potentially dilutive securities would have been anti-dilutive and are therefore excluded.

 

For the three and six months ended May 30, 2020 and June 1, 2019, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive:

 

   

Quarter Ended

   

Six Months Ended

 
   

May 30, 2020

   

June 1, 2019

   

May 30, 2020

   

June 1, 2019

 
                                 

Stock options

    5,250       -       5,250       -  

Unvested shares

    51,653       45,653       88,153       45,653  
                                 

Total anti-dilutive securities

    56,903       45,653