What changed in this filing

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Item 1. Financial Statements

2021-07-01 compared with 2021-04-01 · 297 added, 128 removed, 452 unchanged (48% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED FEBRUARY 27, 2021 AND FEBRUARY 29, 2020 –

FOR THE PERIODS ENDED MAY 29, 2021 AND MAY 30, 2020 –

(In thousands)

Quarter Ended

February 27, 2021

February 29, 2020

Six Months Ended

Operating activities:

$ 4,011  

Net income (loss)

$ 9,985  

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

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

Depreciation and amortization

Gain on lease modification

Asset impairment charges

12,184  

(Gain) loss on sale of property and equipment

Goodwill impairment charge

Inventory valuation charges

Bad debt valuation charges (recoveries)

( 43 )  

Deferred income taxes

4 unchanged sentences

Other current assets

( 768 )  

Right of use assets under operating leases

12,558  

14,810  

Customer deposits

3 unchanged sentences

Net cash provided by (used in) operating activities

12,050  

Investing activities:

4 unchanged sentences

( 335 )  

Net cash used in investing activities

Net cash provided by (used in) investing activities

( 3,722 )  

2 unchanged sentences

( 4,954 )  

Proceeds from the exercise of stock options

Other issuance of common stock

5 unchanged sentences

( 467 )  

Repayments of notes payable

Net cash used in financing activities

12 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

7 unchanged sentences

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 income net of estimates for returns and allowances.

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 income.

Sales of logistical services from Zenith to our wholesale segment have been eliminated in consolidation, and Zenith’s operating costs and expenses associated with sales to external customers are reported as cost of logistical services in our condensed consolidated statements of operations.

Recently Adopted Accounting Pronouncements

3 unchanged sentences

Measurement of Credit Losses on Financial Instruments (“ASU 2016 - 13”

The guidance in ASU 2016 - 13 replaces the incurred loss impairment methodology under current GAAP.

The guidance in ASU 2016 - 13 replaces the incurred loss impairment methodology under previous GAAP.

The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments.

We determined that the guidance in ASU 2016 - 13 applied to our trade receivables and contract assets, and that there was no material impact to our financial condition or results of operations as a result of the adoption.

We assessed the guidance under ASU 2016 - 13 as applied to our trade receivables and contract assets, and determined that there was no material impact to our financial condition or results of operations as a result of the adoption.

Effective as of the beginning of fiscal 2021, we have adopted Accounting Standards Update No.

2018 - 15, Accounting Standards Update No.

2018 - 15 –

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350 - 40 ):

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license.

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018 - 15”

ASU 2018 - 15 was issued to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license.

The amendments in ASU 2018 - 15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license).

The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in ASU 2018 - 15.

We adopted ASU 2018 - 15 on a prospective basis and the adoption did not have a material impact upon our financial position or results of operations.

We adopted ASU 2018 - 15 on a prospective basis and the adoption did not have a material impact upon our financial condition or results of operations.

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”

On March 11, 2020, the World Health Organization declared the coronavirus (“COVID- 19”

) outbreak to be a global pandemic.

1 unchanged sentence

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.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

During fiscal 2020, in response to the restrictive measures imposed by governmental authorities 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 primarily during the second fiscal quarter.

This extended period of suspended operations had had a material adverse impact upon our results of operations during the second fiscal quarter and resulted in a significant net loss for the year ended November 28, 2020.

However, since restarting our manufacturing operations and reopening stores, we have seen a significant improvement in business conditions which allowed us to return to overall profitability for the third and fourth fiscal quarters of 2020 continuing into the first quarter of fiscal 2021.

In response to the restrictive measures imposed by governmental authorities and for the protection of our employees and customers, we temporarily closed our dedicated stores, our manufacturing locations and many of our warehouses for much of the second fiscal quarter of 2020.

This extended period of suspended operations had a material adverse impact upon our results of operations during the second fiscal quarter of 2020 and resulted in a significant net loss 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 10 ).

Tempering these improvements are the continuing logistical challenges faced by the entire home furnishings industry resulting from COVID-related labor shortages and supply chain disruptions creating significant delays in order fulfillment and increasing backlogs.

Whereas most state and local governments have eased restrictions on commercial retail activity and mass vaccination programs in the U.S.

are underway, it is nevertheless possible that a resurgence in COVID- 19 cases could prompt a return to tighter restrictions in certain areas of the country.

Furthermore, while the home furnishings industry has fared much better during the pandemic than certain other sectors of the economy, continued economic weakness may eventually have an adverse impact upon our business, and order cancellations could result if the present delays in order fulfillment continue for an extended period of time.

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.

Whereas the progress in mass vaccination programs in the U.S.

has prompted state and local governments to substantially lift most remaining restrictions on commercial retail activity, it is nevertheless possible that a resurgence in COVID- 19 cases due to new variants of the coronavirus entering the U.S.

could prompt a return to tighter restrictions in certain areas of the country.

Furthermore, pandemic-related labor shortages and supply chain disruptions remain unresolved and order cancellations could result if the present delays in order fulfillment continue for an extended period of time.

Therefore, 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.

Interim Financial Presentation

All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements.

The results of operations for the three months ended February 27, 2021 are not necessarily indicative of results for the full fiscal year.

The results of operations for the three and six months ended May 29, 2021 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 28, 2020.

1 unchanged sentence

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.

Our effective tax rates for the three and six months ended May 29, 2021 of 25.8 % and 27.3 %, respectively, differ from the federal statutory rate of 21 % primarily due to the effects of state income taxes and various permanent differences, including tax benefits (deficiencies) of $ 18 and ($ 117 ) during the three and six months ended May 29, 2021, respectively, arising from stock-based compensation.

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 allowed 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 net operating loss from fiscal 2020 to tax years in which the federal statutory rate was 35 %, and to the effects of state income taxes and various permanent differences.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

(Dollars in thousands except share and per share data)

Financial Instruments and Fair Value Measurements

2 unchanged sentences

Because of their short maturities, the carrying amounts of cash and cash equivalents, short-term investments in CDs, accounts receivable, and accounts payable approximate fair value.

Our short-term investments of $ 17,715 at February 27, 2021 and November 28, 2020 consisted of CDs.

At February 27, 2021, the CDs had original terms averaging eight months, bearing interest at rates ranging from 0.05 % to 1.20 %.

At February 27, 2021, the weighted average remaining time to maturity of the CDs was approximately five months and the weighted average yield of the CDs was approximately 0.12 %.

Our short-term investments of $ 17,715 at May 29, 2021 and November 28, 2020 consisted of CDs.

At May 29, 2021, the CDs had original terms averaging eight months, bearing interest at rates ranging from 0.01 % to 0.85 %.

At May 29, 2021, the weighted average remaining time to maturity of the CDs was approximately four months and the weighted average yield of the CDs was approximately 0.07 %.

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 February 27, 2021 and November 28, 2020 approximates their fair value.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

Due to the nature of these investments and their relatively short maturities, the carrying amount of the short-term investments at May 29, 2021 and November 28, 2020 approximates their fair value.

Fair Value Measurement

13 unchanged sentences

Our primary non-recurring fair value estimates typically involve business acquisitions or the impairment of long-lived assets which involve a combination of Level 2 and Level 3 inputs.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

(Dollars in thousands except share and per share data)

Accounts Receivable

12 unchanged sentences

Actual credit losses could differ from those estimates.

Activity in the allowance for doubtful accounts for the three months ended February 27, 2021 was as follows:

Activity in the allowance for doubtful accounts for the six months ended May 29, 2021 was as follows:

Balance at November 28, 2020

$ 1,211  

Additions charged to expense

Write-offs against allowance

Balance at February 27, 2021

Reductions to allowance

Balance at May 29, 2021

$ 1,168  

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

41 unchanged sentences

( 503 )  

Balance at February 27, 2021

Balance at May 29, 2021

$ 3,155  

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

1 unchanged sentence

Goodwill and other intangible assets consisted of the following:

February 27, 2021

Intangibles subject to amortization

27 unchanged sentences

$ 23,827  

The carrying amounts of goodwill by reportable segment at both February 27, 2021 and November 28, 2020 are as follows:

The carrying amounts of goodwill by reportable segment at both May 29, 2021 and November 28, 2020 are as follows:

$ 9,188  

7 unchanged sentences

$ 12,146  

Due to the impact of the COVID- 19 pandemic, we performed an interim impairment assessment of our remaining goodwill as of May 30, 2020, the end of our second quarter of fiscal 2020.

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.

Our annual goodwill impairment test, conducted as of the beginning of our fourth quarter of fiscal 2020, resulted in no additional impairment.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

Amortization expense associated with intangible assets during the three months ended February 27, 2021 and February 29, 2020 was as follows:

Amortization expense associated with intangible assets during the three and six months ended May 29, 2021 and May 30, 2020 was as follows:

Quarter Ended

Six Months Ended

Intangible asset amortization expense

Estimated future amortization expense for intangible assets that exist at February 27, 2021 is as follows:

Estimated future amortization expense for intangible assets that exist at May 29, 2021 is as follows:

Remainder of fiscal 2021

2 unchanged sentences

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 .

At May 29, 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.

We were in compliance with all covenants under the agreement as of May 29, 2021 and expect to remain in compliance through the end of fiscal 2021.

The credit facility matures on January 31, 2022.

2 unchanged sentences

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 $ 8,525 and $ 8,565 as of February 27, 2021 and November 28, 2020, respectively.

The liability for the Supplemental Plan was $ 8,485 and $ 8,565 as of May 29, 2021 and November 28, 2020, 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.

1 unchanged sentence

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 $ 1,533 and $ 1,506 as of February 27, 2021 and November 28, 2020, respectively.

The liability for the LTC Awards was $ 1,520 and $ 1,506 as of May 29, 2021 and November 28, 2020, respectively.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

5 unchanged sentences

$ 10,071  

Components of net periodic pension costs for our defined benefit plans for the three months ended February 27, 2021 and February 29, 2020 are as follows:

Components of net periodic pension costs for our defined benefit plans for the three and six months ended May 29, 2021 and May 30, 2020 are as follows:

Quarter Ended

February 27, 2021

February 29, 2020

Six Months Ended

Interest cost

2 unchanged sentences

Net periodic pension cost

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 income.

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

1 unchanged sentence

This plan has been frozen with no additional participants or deferrals permitted.

Our liability under this plan was $ 1,664 and $ 1,677 as of February 27, 2021 and November 28, 2020, respectively.

Our liability under this plan was $ 1,658 and $ 1,677 as of May 29, 2021 and November 28, 2020, 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 $ 1,533 and $ 1,250 as of February 27, 2021 and November 28, 2020, respectively.

Our liability under this plan, including both accrued Company contributions and participant salary deferrals, was $ 1,644 and $ 1,250 as of May 29, 2021 and November 28, 2020, 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:

February 27, 2021

November 28, 2020

Accrued compensation and benefits

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

We recognized expense under our deferred compensation arrangements during the three months ended February 27, 2021 and February 29, 2020 as follows:

We recognized expense under our deferred compensation arrangements during the three and six months ended May 29, 2021 and May 30, 2020 as follows:

Quarter Ended

February 27, 2021

February 29, 2020

Six Months Ended

Deferred compensation expense

Stock Compensation

On March 10, 2021, our shareholders approved the Bassett Furniture Industries, Incorporated 2021 Stock Incentive Plan (the “2021 Plan”).

All present and future non-employee directors, key employees and outside consultants for the Company are eligible to receive incentive awards under the 2021 Plan.

Our Organization, Compensation and Nominating Committee (the “OCN Committee”) selects eligible key employees and outside consultants to receive awards under the 2021 Plan in its discretion.

Our Board of Directors or any committee designated by the Board of Directors selects eligible non-employee directors to receive awards under the 2021 Plan in its discretion.

Five hundred thousand ( 500,000 ) shares of common stock are reserved for issuance under the 2021 Plan.

Participants may receive the following types of incentive awards under the 2021 Plan:

stock options, stock appreciation rights, payment shares, restricted stock, restricted stock units and performance shares.

Stock options may be incentive stock options or non-qualified stock options.

Stock appreciation rights may be granted in tandem with stock options or as a freestanding award.

Non-employee directors and outside consultants are eligible to receive restricted stock and restricted stock units only.

The full terms of the 2021 Plan have been filed as an exhibit to our Schedule 14A filed with the United States Securities and Exchange Commission on February 8, 2021.

During the second quarter of fiscal 2021, 7,105 restricted shares with an aggregate fair value of $ 175 were granted to our non-employee directors under the 2021 Plan.

These shares will fully vest on the first anniversary of the grant.

The Bassett Furniture Industries, Incorporated 2010 Stock Incentive Plan, which was approved on April 14, 2010 and amended and restated effective January 13, 2016 ( the “2010 Plan”), expired in April of 2020 and no additional grants can be awarded under the plan.

During the six months ended May 29, 2021, 31,000 restricted shares previously granted under the 2010 Plan were vested and released, of which 10,850 shares were withheld to cover withholding taxes of $ 219 .

At May 29, 2021, there were 3,500 unvested restricted shares outstanding that were granted under the 2010 Plan and will vest during the fourth quarter of fiscal 2022.

During the three and six months ended May 29, 2021, 5,250 stock options granted under the 2010 Plan were exercised resulting in proceeds to the Company of $ 42 .

At May 29, 2021, there were no additional stock options outstanding under the 2010 Plan.

Stock compensation expense for the three and six months ended May 29, 2021 and May 30, 2020 was as follows:

Quarter Ended

Six Months Ended

Stock compensation expense

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

(Dollars in thousands except share and per share data)

Other Operating Losses

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 2020.

Litigation Expense

During the three and six months ended May 30, 2020 we accrued $ 1,050 relating to estimated costs to resolve certain wage and hour violation claims that had been asserted against the Company.

Commitments and Contingencies

4 unchanged sentences

Lease guarantees range from one to three years.

We were contingently liable under licensee lease obligation guarantees in the amounts of $ 2,064 and $ 1,811 at February 27, 2021 and November 28, 2020, respectively.

We were contingently liable under licensee lease obligation guarantees in the amounts of $ 2,073 and $ 1,811 at May 29, 2021 and November 28, 2020, 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 February 27, 2021 and November 28, 2020 was not material.

Earnings Per Share

The following reconciles basic and diluted earnings per share:

Weighted Average Shares

Net Income Per Share

For the quarter ended February 27, 2021:

Basic loss per share

The fair value of lease guarantees (an estimate of the cost to the Company to perform on these guarantees) at May 29, 2021 and November 28, 2020 was not material.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

(Dollars in thousands except share and per share data)

Earnings (Loss) Per Share

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

Weighted Average

For the quarter ended May 29, 2021:

Basic earnings per share

$ 5,974  

3 unchanged sentences

Options and restricted shares

Diluted earnings per share

$ 5,974  

Diluted loss per share

9,900,103  

$ 0.60  

For the quarter ended May 30, 2020:

Basic loss per share

$ ( 20,352 )  

For the quarter ended February 29, 2020:

9,956,975  

Add effect of dilutive securities:

Options and restricted shares*

Diluted loss per share

$ ( 20,352 )  

9,956,975  

For the six months ended May 29, 2021:

Basic earnings per share

9 unchanged sentences

$ 1.01  

For the six months ended May 30, 2020:

Basic loss per share

$ ( 19,142 )  

9,992,101  

Add effect of dilutive securities:

Options and restricted shares *

Diluted loss per share

$ ( 19,142 )  

9,992,101  

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

For the three and six months ended May 29, 2021 and May 30, 2020, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive:

Quarter Ended

Six Months Ended

Stock options

Unvested shares

51,653  

88,153  

Total anti-dilutive securities

56,903  

93,403  

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

For the three months ended February 27, 2021 and February 29, 2020, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive:

Quarter Ended

February 27, 2021

February 29, 2020

Unvested shares

34,000  

Segment Information

3 unchanged sentences

Our wholesale segment also includes our holdings of short-term investments and retail real estate previously leased as licensee stores.

The earnings and costs associated with these assets are included in other income (loss), net, in our condensed consolidated statements of income.

The earnings and costs associated with these assets are included in other income (loss), net, in our condensed consolidated statements of operations.

Retail –

4 unchanged sentences

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 total operating costs, including those associated with providing logistical services to the Company as well as to third -party customers, are included in selling, general and administrative expenses and were $ 19,621 and $ 20,480 for the three months ended February 27, 2021 and February 29, 2020, respectively.

Inter-company net sales elimination represents the elimination of wholesale sales to our Company-owned stores and the elimination of Zenith logistics revenue from our wholesale and retail segments.

Revenue from the performance of these services to other customers and the associated cost is included in logistical services revenue and cost of logistical services, respectively, in our condensed consolidated statements of operations.

Inter-company net sales elimination represents the elimination of wholesale sales to our Company-owned stores and the elimination of Zenith logistics revenue from our wholesale segment.

Inter-company income elimination includes the embedded wholesale profit in the Company-owned store inventory that has not been realized.

These profits will be recorded when merchandise is delivered to the retail consumer.

The inter-company income elimination also includes rent paid by our retail stores occupying Company-owned real estate, and the elimination of shipping and handling charges from Zenith for services provided to our wholesale and retail operations.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

1 unchanged sentence

Quarter Ended

February 27, 2021

February 29, 2020

Six Months Ended

Sales Revenue

Wholesale sales of furniture and accessories

$ 76,034  

$ 33,128  

Retail - Company-owned stores

$ 146,298  

$ 98,145  

Logistical services

Sales to retail segment

( 28,520 )  

( 13,299 )  

Inter-company eliminations:

Furniture and accessories

( 57,524 )  

Logistical services

Wholesale sales to external customers

47,514  

1 unchanged sentence

88,774  

52,925  

Retail sales of furniture and accessories

62,483  

33,171  

122,878  

99,017  

Consolidated net sales of furniture and accessories

109,997  

53,000  

211,652  

151,942  

Logistical services revenue

22,244  

15,259  

42,325  

36,574  

Services to wholesale segment

( 8,182 )  

( 4,458 )  

( 16,245 )  

Logistical services to external customers

14,062  

10,801  

26,080  

23,979  

Total sales revenue

$ 124,059  

$ 63,801  

$ 237,732  

$ 175,921  

Income (Loss) from Operations

1 unchanged sentence

$ ( 7,381 )  

$ 10,156  

Retail - Company-owned stores

( 9,170 )  

Logistical services

( 1,842 )  

Inter-company elimination

( 255 )  

Asset impairment charges

( 12,184 )  

Goodwill impairment charge

( 1,971 )  

Depreciation and Amortization

Retail - Company-owned stores

Logistical services

Litigation expense

( 1,050 )  

$ 8,379  

Capital Expenditures

Retail - Company-owned stores

Logistical services

$ ( 31,229 )  

Identifiable Assets

February 27, 2021

November 28, 2020

$ 14,400  

Depreciation and Amortization

$ 1,621  

$ 1,591  

Retail - Company-owned stores

Logistical services

$ 3,562  

$ 3,616  

Logistical services

$ 6,893  

$ 7,239  

Capital Expenditures

$ 1,409  

$ 2,166  

Wholesale shipments by type

Quarter Ended

February 27, 2021

February 29, 2020

Bassett Custom Upholstery

Retail - Company-owned stores

Logistical services

$ 2,588  

1 unchanged sentence

$ 1,791  

Bassett Leather

Identifiable Assets

$ 185,780  

Bassett Custom Wood

$ 176,243  

Retail - Company-owned stores

168,697  

169,105  

Bassett Casegoods

Logistical services

64,002  

2 unchanged sentences

$ 402,549  

See Note 15, Revenue Recognition, for disaggregated revenue information regarding sales of furniture and accessories by product type for the wholesale and retail segments.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

6 unchanged sentences

We typically collect a significant portion of the purchase price from our retail customers as a deposit upon order, with the balance typically collected upon delivery.

These customer deposits are carried on our balance sheet as a current liability until delivery is fulfilled and amounted to $ 44,674 and $ 39,762 as of February 27, 2021 and November 28, 2020, respectively.

Approximately 76 % of the customer deposits held at November 28, 2020 related to performance obligations that were satisfied during the current year-to-date period and have therefore been recognized in revenue for the quarter ended February 27, 2021.

These customer deposits are carried on our balance sheet as a current liability until delivery is fulfilled and amounted to $ 47,911 and $ 39,762 as of May 29, 2021 and November 28, 2020, respectively.

Substantially all of the customer deposits held at November 28, 2020 related to performance obligations that were satisfied during the current year-to-date period and have therefore been recognized in revenue for the six months ended May 29, 2021.

For our logistical services segment, line-haul freight revenue is recognized as services are performed and are billed to the customer upon the completion of delivery to the destination.

Because the customer receives the benefits of these services as the freight is in transit from point of origin to destination, we recognize revenue using a percentage of completion method based on our estimate of the amount of time freight has been in transit as of the reporting date compared with our estimate of the total required time for the deliveries.

The balances of assets recognized for shipping revenues earned but not billed as of February 27, 2021 and November 28, 2020 were not material.

The balances of assets recognized for shipping revenues earned but not billed were $ 962 and $ 783 as of May 29, 2021 and November 28, 2020, respectively.

Warehousing services revenue is based upon warehouse space occupied by a customer’s goods and inventory movements in and out of a warehouse and is recognized as such services are provided and billed to the customer concurrently in the same period.

1 unchanged sentence

We do not disclose amounts allocated to remaining unsatisfied performance obligations as they are expected to be satisfied within one year or less.

See Note 12, Segment Information, for disaggregated revenue information.

Disaggregated revenue information for sales of furniture and accessories by product category for the three and six months ended May 29, 2021 and May 30, 2020, excluding intercompany transactions between our segments, is a follows:

Quarter Ended

Bassett Custom Upholstery

$ 25,960  

$ 35,378  

$ 61,338  

$ 11,728  

$ 17,620  

$ 29,348  

Bassett Leather

10,201  

10,429  

Bassett Custom Wood

14,463  

Bassett Casegoods

10,704  

15,218  

Accessories, mattresses and other (1)

Consolidated net sales of furniture and accessories

$ 47,514  

$ 62,483  

$ 109,997  

$ 19,829  

$ 33,171  

$ 53,000  

Six Months Ended

Bassett Custom Upholstery

$ 50,858  

$ 69,839  

$ 120,697  

$ 31,905  

$ 54,380  

$ 86,285  

Bassett Leather

17,756  

18,236  

Bassett Custom Wood

12,176  

13,082  

25,258  

16,422  

Bassett Casegoods

21,781  

29,765  

19,951  

25,670  

Accessories, mattresses and other (1)

17,696  

15,065  

Consolidated net sales of furniture and accessories

$ 88,774  

$ 122,878  

$ 211,652  

$ 52,925  

$ 99,017  

$ 151,942  

Includes the sale of goods other than Bassett-branded products, such as accessories and bedding, and also includes the sale of furniture protection plans.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

1 unchanged sentence

The following changes in our stockholders’

equity occurred during the three months ended February 27, 2021 and February 29, 2020:

February 27, 2021

February 29, 2020

equity occurred during the three and six months ended May 29, 2021 and May 30, 2020:

Quarter Ended

Six Months Ended

Common Stock:

2 unchanged sentences

$ 50,173  

$ 49,714  

$ 50,581  

Issuance of common stock

2 unchanged sentences

( 394 )  

( 285 )  

( 572 )  

End of period

1 unchanged sentence

$ 49,977  

$ 49,262  

$ 49,977  

Common Shares Issued and Outstanding:

2 unchanged sentences

10,034,591  

9,942,787  

10,116,291  

Issuance of common stock

17,815  

17,765  

24,036  

23,508  

Forfeited shares

1 unchanged sentence

( 78,952 )  

( 57,000 )  

( 114,464 )  

End of period

1 unchanged sentence

9,995,356  

9,852,359  

9,995,356  

Additional Paid-in Capital:

4 unchanged sentences

( 90 )  

( 102 )  

( 156 )  

Stock based compensation

4 unchanged sentences

$ 125,078  

$ 109,710  

$ 129,130  

Cumulative effect of a change in accounting principal

Net income for the period

Net income (loss) for the period

( 20,352 )  

Purchase and retirement of common stock

( 1,907 )  

( 87 )  

( 2,415 )  

Cash dividends declared

( 1,235 )  

( 1,248 )  

( 4,955 )  

End of period

1 unchanged sentence

$ 103,391  

$ 112,325  

$ 103,391  

Accumulated Other Comprehensive Loss:

1 unchanged sentence

$ ( 1,359 )  

$ ( 1,211 )  

$ ( 1,394 )  

Amortization of pension costs, net of tax

1 unchanged sentence

$ ( 1,325 )  

$ ( 1,187 )  

$ ( 1,325 )  

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

10 unchanged sentences

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

FEBRUARY 27, 2021

(Dollars in thousands except share and per share data)

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

What changed 10-Q

Item 1. Financial Statements