BASSETT FURNITURE INDUSTRIES INC 10-Q/A

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   Safe-harbor, forward-looking statements:   This report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of Bassett Furniture Industries, Incorporated and subsidiaries. Such forward-looking statements are identified by use of forward-looking words such as “ anticipates ”, “ believes ”, “ plans ”, “ estimates ”, “ expects ”, “ aims ” and “ intends ” or words or phrases of similar expression. These forward-looking statements involve certain risks and uncertainties. No assurance can be given that any such matters will be realized. Important factors that could cause actual results to differ materially from those contemplated by such forward-looking statements include:     • the impact of the COVID-19 outbreak upon our ability to maintain normal operations at our retail stores and manufacturing facilities and the resulting effects any future interruption of those operations may have upon our financial condition, results of operations and liquidity, as well as the impact of the outbreak upon general economic conditions, including consumer spending and the strength of the housing market in the United States   • competitive conditions in the home furnishings industry   • overall retail traffic levels and consumer demand for home furnishings   • ability of our customers and consumers to obtain credit   • the profitability of the Bassett stores (independent licensees and Company-owned retail stores) which may result in future store closings   • ability to implement our Company-owned retail strategies and realize the benefits from such strategies, including our initiatives to expand and improve our digital marketing capabilities, as they are implemented   • fluctuations in the cost and availability of raw materials, fuel, labor and sourced products, including those which may result from supply chain disruptions and the imposition of new or increased duties, tariffs, retaliatory tariffs and trade limitations with respect to foreign-sourced products   • results of marketing and advertising campaigns   • effectiveness and security of our information and technology systems and possible disruptions due to cybersecurity threats, including any impacts from a network security incident; and the sufficiency of our insurance coverage, including cybersecurity insurance.   • future tax legislation, or regulatory or judicial positions   • ability to efficiently manage the import supply chain to minimize business interruption   • concentration of domestic manufacturing, particularly of upholstery products, and the resulting exposure to business interruption from accidents, weather and other events and circumstances beyond our control   • general risks associated with providing freight transportation and other logistical services through our wholly owned subsidiary, Zenith Freight Lines, LLC   Additionally, other risks that could cause actual results to differ materially from those contemplated by such forward-looking statements are set forth in Part I, Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended November 28, 2020.   21 of 33     PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES FEBRUARY 27, 2021 (Dollars in thousands except share and per share data)   You should keep in mind that any forward-looking statement made by us in this report or elsewhere speaks only as of the date on which such forward-looking statement is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that the events described in any forward-looking statement made in this report or elsewhere, might not occur.     Overview   Bassett is a leading retailer, manufacturer and marketer of branded home furnishings. Our products are sold primarily through a network of Company-owned and licensee-owned branded stores under the Bassett Home Furnishings (“BHF”) name, with additional distribution through other wholesale channels including multi-line furniture stores, many of which feature Bassett galleries or design centers. We were founded in 1902 and incorporated under the laws of Virginia in 1930. Our rich 119-year history has instilled the principles of quality, value, and integrity in everything we do, while simultaneously providing us with the expertise to respond to ever-changing consumer tastes and meet the demands of a global economy.   With 97 BHF stores at February 27, 2021, we have leveraged our strong brand name in furniture into a network of Company-owned and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories.  Our store program is designed to provide a single source home furnishings retail store that provides a unique combination of stylish, quality furniture and accessories with a high level of customer service.  In order to reach markets that cannot be effectively served by our retail store network, we also distribute our products through other wholesale channels including multi-line furniture stores, many of which feature Bassett galleries or design centers. We use a network of over 30 independent sales representatives who have stated geographical territories. These sales representatives are compensated based on a standard commission rate. We believe this blended strategy provides us the greatest ability to effectively distribute our products throughout the United States and ultimately gain market share.     The BHF stores feature custom order furniture, free in-home or virtual design visits (“home makeovers”) and coordinated decorating accessories.  Our philosophy is based on building strong long-term relationships with each customer.  Salespeople are referred to as “Design Consultants” and are trained to evaluate customer needs and provide comprehensive solutions for their home decor.  Until a rigorous training and design certification program is completed, Design Consultants are not authorized to perform in-home or virtual design services for our customers.   We have factories in Newton, North Carolina that manufacture custom upholstered furniture. We also have factories in Martinsville and Bassett, Virginia that assemble and finish our custom dining offerings, including our solid hardwood furniture “Bench Made” line. Our manufacturing team takes great pride in the breadth of its options, the precision of its craftsmanship, and the speed of its manufacturing process. Our logistics team then promptly ships the product to one of our home delivery hubs or to a location specified by our licensees.  In addition to the furniture that we manufacture domestically, we source most of our formal bedroom and dining room furniture (casegoods) and certain leather upholstery offerings from several foreign plants, primarily in Vietnam, Thailand and China. Over 75% of the products we currently sell are manufactured in the United States.   During fiscal 2018, we acquired Lane Venture, a manufacturer and distributor of premium outdoor furniture which is operated as a component of our wholesale segment. This acquisition marked our entry into the market for outdoor furniture and we believe that Lane Venture has provided a foundation for us to become a significant participant in this category. Our strategy is to distribute this brand outside of our BHF store network only.   With the knowledge we have gained through operating Lane Venture, we have developed the Bassett Outdoor brand that is only marketed through the BHF store network. This allows Bassett branded product to move from inside the home to outside the home to capitalize on the growing trend of outdoor living.   We also own Zenith Freight Lines, LLC (“Zenith”) which provides logistical services to Bassett along with other furniture manufacturers and retailers. Zenith delivers best-of-class shipping and logistical support services that are uniquely tailored to the needs of Bassett and the furniture industry. Approximately 60% of Zenith’s revenue is generated from services provided to non-Bassett customers.   22 of 33     PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES FEBRUARY 27, 2021 (Dollars in thousands except share and per share data)   We consider our website to be the front door to our brand experience where customers can research our furniture and accessory offerings and subsequently buy online or engage with an in-store design consultant. Customer acquisition resulting from our digital outreach strategies increased our traffic to the website by 53% and web orders by 55% for the first quarter of 2021 as compared to 2020. Digital advertising continues to dominate our marketing expenditures as we continue to spend less in traditional television and direct mail advertising. We expect to continue investing in our website to improve the navigation and the ordering capabilities to increase web sales. Much of our current product offerings highlight the breadth and depth of our custom furniture capabilities which are difficult to show and sell online. We plan to expand our merchandising strategies to include more product that can be more easily purchased online with or without a store visit. While we work to increase web sales, we will not compromise on our in-store experience or the quality of our in-home makeover capabilities.   We also continue to re-examine the performance of every one of our stores. Store traffic has been declining for three years and the effect on our retail model has become increasingly challenging. We believe that on a market-by-market basis, there will be fewer stores in the future. We will continue to evaluate store-by-store performance as we seek the optimal store count in the markets in which we compete at retail.   The migration to digital brand research and compressed transaction cycles have caused us to comprehensively evaluate all of our American made custom products. While our Custom Upholstery, Custom Dining, and Bench Made product lines continue to be our most successful offerings, they are not conducive to web transactions; most of these items must be purchased in a store. Furthermore, we offer many upholstery trim options, fabrics and finishes that have low rates of sale and that make web navigation more difficult for the consumer. Consequently, we will continue to methodically re-design each one of these important lines. Our intent is to continue to offer the consumer custom options that will help them personalize their home but to do so in an edited fashion that will provide a better web experience in the research phase and will also allow the final purchase to be made either on the web or in the store.   We also plan to heavily emphasize our “Made in America” story and utilize locally harvested and organic materials when possible. As part of this, we recently rebranded our premier Custom Upholstery line to be part of the Bench Made program emphasizing that those products are artisan crafted with exceptional domestic materials and are made to order. In addition, we expanded our Bench Made solid wood dining offerings to provide a sleeker more contemporary styling product to complement our initial Bench Made dining offerings.   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 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 had a significant adverse impact upon many sectors of the economy, including non-essential retail commerce, beginning in our second fiscal quarter of 2020. Therefore, our results of operations for the quarter ended February 29, 2020 were not impacted by COVID-19.   In response to the above and for the protection of our employees and customers, we temporarily closed our dedicated BHF stores, our manufacturing locations and many of our warehouses for several weeks primarily during the second fiscal quarter of 2020. The disruption to our operations caused by the COVID-19 pandemic resulted in a significant loss for the second quarter of fiscal 2020 which drove the loss for the full year of fiscal 2020 despite our return to profitability during the third and fourth fiscal quarters.   Since restarting the manufacturing operations and reopening stores, the pace of incoming wholesale orders from both the retail stores and our independent dealers outside the BHF store network have far exceeded our post reopening forecasts. Wholesale orders for the first quarter of 2021 increased 44% as compared to the pre-pandemic levels of the first quarter of fiscal 2020. However, supply chain disruptions causing shortages of various raw materials, including fabric, foam and plywood, coupled with logistical challenges have created significant delays in order fulfillment resulting in abnormally high backlogs. In addition, inflationary pressures throughout the supply chain have resulted in us implementing multiple wholesale price increases over the last few months. We expect that wholesale gross margins will be slightly impacted in the second quarter as we cycle through the backlog. We also expect the supply chain issues will subside somewhat by the end of May as suppliers continue to increase production.   To address our growing backlog, we have made the commitment to open another upholstery manufacturing facility in Newton, NC, adjacent to our existing 500,000 square foot complex. Production from this additional 123,000 square foot facility should begin by June 1 and will be dedicated to our opening price point “Everyday Value” product. The added space will also allow us to expand our Bench Made motion program, previously referred to as Magnificent Motion, that has exceeded our sales projections since its debut in early 2020.   We continue to closely monitor the COVID-19 pandemic and the potential effects on the economy, the consumer and our business. While the rate of incoming orders at both our wholesale and retail segments is currently strong, there are continuing logistical challenges faced by us and the entire home furnishings industry resulting from COVID-related labor shortages and supply chain disruptions creating significant delays in order fulfillment and increasing backlogs. Although unable to predict with certainty, we expect gradual decreases in wholesale and retail backlogs over the remainder of 2021 driven by an anticipated lower rate of future incoming orders coupled with increased manufacturing and shipping activity. While the home furnishings industry has fared much better during the pandemic than other sectors of the economy, the speed and direction of the economic recovery remains largely dependent upon the success of mass vaccination programs and the declining trend in COVID-19 cases, and any interruption or reversal of these trends may yet have an additional adverse impact upon our business. The timing of any future actions by us in response to COVID-19 is largely dependent on the mitigation of the spread of the virus, the speed with which vaccinations are disseminated, status of government orders, directives and guidelines, recovery of the business environment, economic conditions, and consumer demand for our products.   23 of 33     PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES FEBRUARY 27, 2021 (Dollars in thousands except share and per share data)   Results of Operations – Quarter ended February 27, 2021 compared with the quarter ended February 29, 2020:   Net sales of furniture and accessories, logistics revenue, cost of furniture and accessories sold, selling, general and administrative (SG&A) expense and income from operations were as follows for the three months ended February 27, 2021 and February 29, 2020:       Quarter Ended     Change       February 27, 2021     February 29, 2020     Dollars     Percent                                                     Sales revenue:                                                 Furniture and accessories   $ 101,655       89.4 %   $ 98,942       88.2 %   $ 2,713       2.7 % Logistics revenue     12,018       10.6 %     13,178       11.8 %     (1,160 )     -8.8 % Total sales revenue     113,673       100.0 %     112,120       100.0 %     1,553       1.4 % Cost of furniture and accessories sold     48,252       42.4 %     45,270       40.4 %     2,982       6.6 % SG&A expenses     59,400       52.3 %     64,640       57.7 %     (5,240 )     -8.1 %                                                   Income from operations   $ 6,021       5.3 %   $ 2,210       2.0 %   $ 3,811       172.4 %   Refer to the segment information which follows for a discussion of the significant factors and trends affecting our results of operations for the three months ended February 27, 2021 as compared with the prior year period.     Segment Information   We have strategically aligned our business into three reportable segments as described below:   Wholesale. The wholesale home furnishings segment is involved principally in the design, manufacture, sourcing, sale and distribution of furniture products to a network of Bassett stores (Company-owned and licensee-owned retail stores) and independent furniture retailers. Our wholesale segment includes our wood and upholstery operations, which include Lane Venture, as well as all corporate selling, general and administrative expenses, including those corporate expenses related to both Company- and licensee-owned stores. We eliminate the sales between our wholesale and retail segments as well as the imbedded profit in the retail inventory for the consolidated presentation in our financial statements. Also included in our wholesale segment are our short-term investments and our holdings of retail real estate previously leased as licensee stores. The earnings and costs associated with these assets are included in other loss, net, in our condensed consolidated statements of income.   Retail – Company-owned stores. Our retail segment consists of Company-owned stores and includes the revenues, expenses, assets and liabilities (including real estate) and capital expenditures directly related to these stores and the Company-owned distribution network utilized to deliver products to our retail customers.   Logistical services. Our logistical services segment reflects the operations of Zenith. In addition to providing shipping and warehousing services for the Company, Zenith also provides similar services to other customers, primarily in the furniture industry. Revenue from the performance of these services to other customers is included in logistical services revenue in our condensed consolidated statements of income. Zenith’s operating costs are included in selling, general and administrative expenses.   24 of 33     PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES FEBRUARY 27, 2021 (Dollars in thousands except share and per share data)   The following tables illustrate the effects of various intercompany eliminations on income from operations in the consolidation of our segment results:       Quarter Ended February 27, 2021       Wholesale     Retail     Logistics     Eliminations     Consolidated   Sales revenue:                                         Furniture & accessories   $ 70,264     $ 60,395     $ -     $ (29,004 )(1)   $ 101,655   Logistics     -       -       20,081       (8,063 )(2)     12,018   Total sales revenue     70,264       60,395       20,081       (37,067 )     113,673   Cost of furniture and accessories sold     47,288       29,309       -       (28,345 )(3)     48,252   SG&A expense     18,179       29,992       19,622       (8,393 )(4)     59,400   Income from operations   $ 4,797     $ 1,094     $ 459     $ (329 )   $ 6,021         Quarter Ended February 29, 2020       Wholesale     Retail     Logistics     Eliminations     Consolidated   Sales revenue:                                         Furniture & accessories   $ 65,017     $ 65,846     $ -     $ (31,921 )(1)   $ 98,942   Logistics     -       -       21,315       (8,137 )(2)     13,178   Total sales revenue     65,017       65,846       21,315       (40,058 )     112,120   Cost of furniture and accessories sold     43,877       32,906       -       (31,513 )(3)     45,270   SG&A expense     18,427       34,189       20,480       (8,456 )(4)     64,640   Income (loss) from operations   $ 2,713     $ (1,249 )   $ 835     $ (89 )   $ 2,210       Notes to segment consolidation table:   (1) Represents the elimination of sales from our wholesale segment to our Company-owned BHF stores. (2) Represents the elimination of logistical services billed to our wholesale segment. (3) Represents the elimination of purchases by our Company-owned BHF stores from our wholesale segment, as well as the change for the period in the elimination of intercompany profit in ending retail inventory. (4) Represents the elimination of rent paid by our retail stores occupying Company-owned real estate, and the elimination of logisitcal services charged by Zenith to Bassett's wholesale segment as follows:       Quarter Ended       February 27, 2021     February 29, 2020                     Intercompany logistical services   $ (8,063 )   $ (8,137 ) Intercompany rents     (330 )     (319 )                   Total SG&A expense elimination   $ (8,393 )   $ (8,456 )   25 of 33     PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES FEBRUARY 27, 2021 (Dollars in thousands except share and per share data)   Wholesale Segment   Results for the wholesale segment for the periods ended February 27, 2021 and February 29, 2020 are as follows:       Quarter Ended     Change       February 27, 2021     February 29, 2020     Dollars     Percent                                                     Net sales   $ 70,264       100.0 %   $ 65,017       100.0 %   $ 5,247       8.1 % Gross profit     22,976       32.7 %     21,140       32.5 %     1,836       8.7 % SG&A expenses     18,179       25.9 %     18,427       28.3 %     (248 )     -1.3 %                                                   Income from operations   $ 4,797       6.8 %   $ 2,713       4.2 %   $ 2,084       76.8 %     Analysis of Results - Wholesale   Net sales for the three months ended February 27, 2021 increased $5,247 or 8.1% over the prior year period. Wholesale orders for the first quarter of 2021 increased 44% as compared to 2020 resulting in a wholesale backlog of $67,469 at February 27, 2021 as compared to $54,874 at November 28, 2020 and $14,617 at February 29, 2020. Wholesale orders from independent dealers increased 98% for the current quarter as compared to the prior year period driven by increases from existing dealers along with an expansion of the dealer base. In addition, orders from the Bassett Home Furnishings store network increased 14% while Lane Venture orders increased by 75%. As previously discussed, Bassett and most of the home furnishings industry has been faced with continuing logistical challenges from COVID-related labor shortages and supply chain disruptions creating significant delays in order fulfillment and increasing backlogs. SG&A expenses as a percentage of sales decreased 240 basis points due to increased leverage of fixed costs due to higher sales volume coupled with various expense reductions implemented in the second and third quarters of fiscal 2020 in response to the COVID-19 pandemic.   Wholesale shipments by type:   Quarter Ended     Change       February 27, 2021     February 29, 2020     Dollars     Percent                                                     Bassett Custom Upholstery   $ 43,348       61.7 %   $ 40,033       61.6 %   $ 3,315       8.3 % Bassett Leather     7,587       10.8 %     4,700       7.2 %     2,887       61.4 % Bassett Custom Wood     11,543       16.4 %     11,290       17.4 %     253       2.2 % Bassett Casegoods     7,786       11.1 %     8,994       13.8 %     (1,208 )     -13.4 % Total   $ 70,264       100.0 %   $ 65,017       100.0 %   $ 5,247       8.1 %   26 of 33     PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES FEBRUARY 27, 2021 (Dollars in thousands except share and per share data)   Retail – Company-owned Stores Segment   Results for the retail segment for the periods ended February 27, 2021 and February 29, 2020 are as follows:       Quarter Ended     Change       February 27, 2021     February 29, 2020     Dollars     Percent                                                     Net sales   $ 60,395       100.0 %   $ 65,846       100.0 %   $ (5,451 )     -8.3 % Gross profit     31,086       51.5 %     32,940       50.0 %     (1,854 )     -5.6 % SG&A expenses     29,992       49.7 %     34,189       51.9 %     (4,197 )     -12.3 % Income (loss) from operations   $ 1,094       1.8 %   $ (1,249 )     -1.9 %   $ 2,343     N/M         Analysis of Results - Retail   Net sales for the three months ended February 27, 2021 declined $5,451 or 8.3% from the prior year period. Written sales, the value of sales orders taken, but not delivered, increased 4.1% for the quarter ended February 27, 2021 as compared to the prior year quarter in spite of having six fewer stores in operation this year, resulting in a retail backlog of $64,806 at February 27, 2021 as compared to $57,041 at November 28, 2020 and $29,775 at February 29, 2020. As previously discussed, Bassett and most of the home furnishings industry has been faced with continuing logistical challenges from COVID-related labor shortages and supply chain disruptions creating significant delays in order fulfillment and increasing backlogs. Gross margins for the first quarter of 2021 increased by 150 basis points primarily driven by lower levels of promotional activity coupled with improved margins on clearance activity. SG&A expenses for the first quarter of 2021 as a percentage of sales decreased by 220 basis points as compared to the first quarter of 2020. This was driven by workforce reductions, lower advertising spending, and overall cost containment activities. In addition, over the course of fiscal 2020 we closed seven unprofitable store locations, six of which were closed subsequent to the first quarter of 2020.       Logistical Services Segment   Results for our logistical services segment for the periods ended February 27, 2021 and February 29, 2020 are as follows:       Quarter Ended     Change       February 27, 2021     February 29, 2020     Dollars     Percent                                                     Logistical services revenue   $ 20,081       100.0 %   $ 21,315       100.0 %   $ (1,234 )     -5.8 % Operating expenses     19,622       97.7 %     20,480       96.1 %     (858 )     -4.2 % Income from operations   $ 459       2.3 %   $ 835       3.9 %   $ (376 )     -45.0 %     Analysis of Operations – Logistical Services   Net revenues for the three months ended February 27, 2021 declined $1,234 or 5.8% from the prior year period. Operating profit declined for the first quarter of 2021 as compared to 2020 primarily due to higher warehousing labor costs as Zenith has been challenged to find and maintain freight-handling personnel in the warehousing operation due to the previously discussed COVID-related labor shortages, partially offset by improved fleet costs driven by lower fuel prices.   27 of 33     PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES FEBRUARY 27, 2021 (Dollars in thousands except share and per share data)   Other Items Affecting Net Income   Other Loss, Net   Other loss, net, for the three months ended February 27, 2021 was $337 compared to $362 for the three months ended February 29, 2020, a decrease of $25. The net change was primarily due to reduced interest income from our investments in CDs along with higher interest expense resulting from additional finance leases, partially offset by lower net cost of Company-owned life insurance.   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.   Our effective tax rates for the quarters ended February 27, 2021 and February 29, 2020 of 29.4% and 34.5%, respectively, differ from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences, including tax deficiencies of $135 and $114 during the quarters ended February 27, 2021 and February 29, 2020, respectively, arising from stock-based compensation.     Liquidity and Capital Resources   Cash Flows   Cash provided by operations for the first quarter of fiscal 2021 was $4,984 compared to $5,243 used in operations for the first quarter of fiscal 2020, representing an increase in cash provided by operations of $10,277. This increase in operating cash flow is primarily due to higher operating income along with a substantial increase in customer deposits taken against unfilled orders, partially offset by other changes in working capital including increased investment in inventory as we work to fulfill our order backlog.   Our overall cash position decreased by $766 during the first quarter of fiscal 2021, compared to an overall decrease of $7,498 during the first quarter of fiscal 2020, an improvement of $6,732 over the prior year period. Partially offsetting the improvement in cash flows from operations, net cash used in investing activities during the first quarter of 2021 increased $1,112 to a net use of $1,189 compared to a net use of $77 for the prior year period. This increase was primarily due to proceeds from the sale of our closed Gulfport store location included in the first quarter of 2020 partially offset by lower capital expenditures in the current year. Net cash used in financing activities during the first quarter of 2021 increased $2,383 to a net use of $4,561 as compared to a net use of $2,178 for the prior year period, primarily due to a special dividend of $2,479 declared and paid during the first quarter of 2021. Share repurchases totaled $534 during the first quarter of fiscal 2021 as compared to $766 repurchased during the first quarter of fiscal 2020. As of February 27, 2021, $7,897 remains authorized under our existing share repurchase plan. With cash and cash equivalents and short-term investments totaling $62,748 on hand at February 27, 2021, expected future operating cash flows and the availability under our credit line noted below, we believe we have sufficient liquidity to fund operations for the foreseeable future.     Debt and Other Obligations   Our bank credit facility provides for a line of credit of up to $25,000. At February 27, 2021, we had $3,181 outstanding under standby letters of credit against our line, leaving availability under our credit line of $21,819. In addition, we have outstanding standby letters of credit with another bank totaling $325. 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. We were in compliance with all covenants under the agreement as of February 27, 2021 and expect to remain in compliance through the end of fiscal 2021. The credit facility matures on January 31, 2022.   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 logistical services segment. We also lease tractors, trailers and local delivery trucks used in our logistical services and retail segments. The present value of our obligations for leases with terms in excess of one year at February 27, 2021 is $139,434 and is included in our accompanying condensed consolidated balance sheet at February 27, 2021. We were contingently liable under licensee lease obligation guarantees in the amount of $2,064 at February 27, 2021. Remaining terms under these lease guarantees range from approximately one to three years. See Note 10 to our condensed consolidated financial statements for additional details regarding our lease guarantees.   28 of 33     PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES FEBRUARY 27, 2021 (Dollars in thousands except share and per share data)   Investment in Retail Real Estate   We have a substantial investment in real estate acquired for use as retail locations and occupied by Company-owned retail stores. Such real estate is included in property and equipment, net, in the accompanying condensed consolidated balance sheets and consists of eight properties with an aggregate square footage of 201,096 and a net book value of $17,211 at February 27, 2021.   Critical Accounting Policies and Estimates   There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Annual Report on Form 10-K for the fiscal year ended November 28, 2020.   Off-Balance Sheet Arrangements   We utilize stand-by letters of credit in the procurement of certain goods in the normal course of business. In addition, we have guaranteed certain lease obligations of licensee operators for some of their store locations. See Note 10 to our condensed consolidated financial statements for further discussion of lease guarantees, including descriptions of the terms of such commitments and methods used to mitigate risks associated with these arrangements.   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, it is our opinion 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 to our condensed consolidated financial statements for further information regarding certain contingencies as of February 27, 2021.