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Item 1. Financial Statements

2022-09-29 compared with 2022-06-30 · 166 added, 86 removed, 443 unchanged (36% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED MAY 28, 2022 AND MAY 29, 2021 –

FOR THE PERIODS ENDED AUGUST 27, 2022 AND AUGUST 28, 2021 –

(In thousands)

Six Months Ended

Nine Months Ended

August 27, 2022

August 28, 2021

Operating activities:

2 unchanged sentences

Gain on disposal of discontinued operations

Gain on sale of property and equipment

Deferred income taxes

27 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

7 unchanged sentences

To date we have concluded that none of our licensees represent VIEs.

We are the primary beneficiary of one VIE by virtue of our control over the activities that most significantly impact the entity’s economic performance.

This VIE was created to effect the purchase of real property in the state of Florida (see Note 12, Discontinued Operations & Assets Held for Sale –

Retail Real Estate Held for Sale).

We were the primary beneficiary of one VIE by virtue of our control over the activities that most significantly impact the entity’s economic performance.

This VIE was created to effect a Section 1031 like-kind exchange involving the purchase of real property in the state of Florida and the sale of real property in the state of Texas (see Note 13, Retail Real Estate Transactions).

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.

6 unchanged sentences

Hunt are presented in the accompanying condensed consolidated balance sheet as of November 27, 2021 as assets and liabilities of discontinued operations held for sale.

See Note 12, Discontinued Operations & Assets Held for Sale, for additional information.

See Note 12, Discontinued Operations, for additional information.

Costs incurred by Bassett for logistical services performed for Bassett by Zenith are included in selling, general and administrative expenses.

10 unchanged sentences

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 28, 2022 are not necessarily indicative of results for the full fiscal year.

The results of operations for the three and nine months ended August 27, 2022 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 27, 2021.

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 rate was 26.0 % for both the three and six months ended May 28, 2022, and 25.8 % and 27.3 % for the three and six months ended May 29, 2021, respectively.

These effective rates differ from the federal statutory rate of 21 % primarily due to the effects of state income taxes and various permanent differences, including tax of $ 552 for the three and six months ended May 28, 2022 associated with non-deductible goodwill written off in connection with our sale of Zenith and included in income tax on discontinued operations, and tax benefits (deficiencies) of $ 18 and ($ 117 ) during the three and six months ended May 29, 2021 arising from stock-based compensation.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

Cash paid for income taxes, net of refunds, during the six months ended May 28, 2022 was $ 14,663 , including approximately one half of the estimated tax payable on the taxable gain realized on our sale of Zenith.

Cash paid for income taxes, net of refunds, during the six months ended May 29, 2021 was $ 626 .

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 rate was 22.8 % and 25.6 % for the three and nine months ended August 27, 2022, respectively, and 27.2 % and 27.3 % for the three and nine months ended August 28, 2021, respectively.

These effective rates differ from the federal statutory rate of 21 % primarily due to the effects of state income taxes and various permanent differences, including those associated with Company-owned life insurance, and tax of $ 552 for the nine months ended August 27, 2022 associated with non-deductible goodwill written off in connection with our sale of Zenith and included in income tax on discontinued operations, and tax deficiencies of $ 117 during the nine months ended August 28, 2021 arising from stock-based compensation.

Cash paid for income taxes, net of refunds, during the nine months ended August 27, 2022 was $ 20,722 , including the estimated tax payable on the taxable gain realized on our sale of Zenith.

Cash paid for income taxes, net of refunds, during the nine months ended August 28, 2021 was $ 624 .

These cash payments for income taxes are included in cash flows from operating activities in the accompanying condensed consolidated statement of cash flows.

Net recoverable income taxes at May 28, 2022 of $ 1,724 include a federal claim for refund of $ 8,511 arising from the carryback of our fiscal 2020 net operating loss (NOL) partially offset by an accrual for the remainder of the estimated tax payable on the taxable gain realized on our sale of Zenith.

Net recoverable income taxes at November 27, 2021 of $ 8,379 consisted primarily of the federal claim for refund due to the 2020 NOL carryback.

Financial Instruments and Investments

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 May 28, 2022 and November 27, 2021 consisted of CDs.

At May 28, 2022, the CDs had original terms averaging eight months, bearing interest at rates ranging from 0.05 % to 1.50 %.

At May 28, 2022, the weighted average remaining time to maturity of the CDs was approximately three months and the weighted average yield of the CDs was approximately 0.26 %.

Our short-term investments of $ 17,715 at August 27, 2022 and November 27, 2021 consisted of CDs.

At August 27, 2022, the CDs had original terms averaging eight months, bearing interest at rates ranging from 0.25 % to 3.00 %.

At August 27, 2022, the weighted average remaining time to maturity of the CDs was approximately six months and the weighted average yield of the CDs was approximately 2.17 %.

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 28, 2022 and November 27, 2021 approximates their fair value.

Due to the nature of these investments and their relatively short maturities, the carrying amount of the short-term investments at August 27, 2022 and November 27, 2021 approximates their fair value.

Accounts Receivable

Accounts receivable consists of the following:

August 27, 2022

November 27, 2021

9 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

Activity in the allowance for credit losses for the three and six months ended May 28, 2022 was as follows:

Activity in the allowance for credit losses for the nine months ended August 27, 2022 was as follows:

Balance at November 27, 2021

1 unchanged sentence

Write-offs against allowance

Balance at May 28, 2022

Balance at August 27, 2022

We believe that the carrying value of our net accounts receivable approximates fair value.

4 unchanged sentences

Inventories were comprised of the following:

August 27, 2022

November 27, 2021

Wholesale finished goods

19 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

3 unchanged sentences

Additions charged to expense

Balance at May 28, 2022

Balance at August 27, 2022

Our estimates and assumptions have been reasonably accurate in the past.

2 unchanged sentences

Goodwill and other intangible assets consisted of the following:

Accumulated Amortization

August 27, 2022

Gross Carrying

Intangibles subject to amortization

3 unchanged sentences

November 27, 2021

Gross Carrying Amount

Accumulated Amortization

Intangible Assets, Net

Intangibles subject to amortization

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

The carrying amounts of goodwill by reportable segment at both May 28, 2022 and November 27, 2021 are as follows:

The carrying amounts of goodwill by reportable segment at both August 27, 2022 and November 27, 2021 are as follows:

Total goodwill

Goodwill and other intangible assets associated with our logistical services segment totaling $ 9,094 at November 27, 2021 are included in assets of discontinued operations held for sale in the accompanying balance sheet (see Note 12).

Amortization expense associated with intangible assets during the three and six months ended May 28, 2022 and May 29, 2021 was as follows:

Amortization expense associated with intangible assets during the three and nine months ended August 27, 2022 and August 28, 2021 was as follows:

Quarter Ended

Six Months Ended

Nine Months Ended

August 27, 2022

August 28, 2021

August 27, 2022

August 28, 2021

Intangible asset amortization expense

Estimated future amortization expense for intangible assets that exist at May 28, 2022 is as follows:

Estimated future amortization expense for intangible assets that exist at August 27, 2022 is as follows:

Remainder of fiscal 2022

1 unchanged sentence

Our bank credit facility provides for a line of credit of up to $ 25,000.

At May 28, 2022, we had $ 3,931 outstanding under standby letters of credit against our line, leaving availability under our credit line of $ 21,069.

In addition, we had outstanding standby letters of credit with another bank totaling $ 325 at May 28, 2022.

At August 27, 2022, we had $ 3,931 outstanding under standby letters of credit against our line, leaving availability under our credit line of $ 21,069 .

In addition, we had outstanding standby letters of credit with another bank totaling $ 325 at August 27, 2022.

The line bears interest at the One-Month Term Secured Overnight Financing Rate (“One-Month Term SOFR”) plus 1.5 % and is unsecured.

4 unchanged sentences

Minimum tangible net worth of $ 140,000 .

We were in compliance with these covenants at May 28, 2022 and expect to remain in compliance for the foreseeable future.

We were in compliance with these covenants at August 27, 2022 and expect to remain in compliance for the foreseeable future.

The credit facility will mature on January 27, 2025, at which time any amounts outstanding under the facility will be due.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

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 $ 9,105 and $ 9,192 as of May 28, 2022 and November 27, 2021, respectively.

The liability for the Supplemental Plan was $ 9,062 and $ 9,192 as of August 27, 2022 and November 27, 2021, 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 $ 1,543 and $ 1,548 as of May 28, 2022 and November 27, 2021, respectively.

The liability for the LTC Awards was $ 1,560 and $ 1,548 as of August 27, 2022 and November 27, 2021, respectively.

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

August 27, 2022

November 27, 2021

Accrued compensation and benefits

1 unchanged sentence

Total pension liability

Components of net periodic pension costs for our defined benefit plans for the three and six months ended May 28, 2022 and May 29, 2021 are as follows:

Components of net periodic pension costs for our defined benefit plans for the three and nine months ended August 27, 2022 and August 28, 2021 are as follows:

Quarter Ended

Six Months Ended

Nine Months Ended

August 27, 2022

August 28, 2021

August 27, 2022

August 28, 2021

Interest cost

6 unchanged sentences

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

Our liability under this plan was $ 1,652 and $ 1,648 as of May 28, 2022 and November 27, 2021, respectively.

Our liability under this plan was $ 1,657 and $ 1,648 as of August 27, 2022 and November 27, 2021, 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 $ 1,964 and $ 1,789 as of May 28, 2022 and November 27, 2021, respectively.

Our liability under this plan, including both accrued Company contributions and participant salary deferrals, was $ 1,946 and $ 1,789 as of August 27, 2022 and November 27, 2021, respectively.

Page 12 of 36

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

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:

August 27, 2022

November 27, 2021

Accrued compensation and benefits

1 unchanged sentence

Total deferred compensation liability

We recognized expense under our deferred compensation arrangements during the three and six months ended May 28, 2022 and May 29, 2021 as follows:

We recognized expense under our deferred compensation arrangements during the three and nine months ended August 27, 2022 and August 28, 2021 as follows:

Quarter Ended

Six Months Ended

Deferred compensation expense

Nine Months Ended

August 27, 2022

August 28, 2021

August 27, 2022

August 28, 2021

Deferred compensation expense (benefit)

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 $ 1,863 and $ 1,845 at May 28, 2022 and November 27, 2021, respectively.

We were contingently liable under licensee lease obligation guarantees in the amounts of $ 1,871 and $ 1,845 at August 27, 2022 and November 27, 2021, 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 28, 2022 and November 27, 2021 was not material.

The fair value of lease guarantees (an estimate of the cost to the Company to perform on these guarantees) at August 27, 2022 and November 27, 2021 was not material.

Page 13 of 36

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

2 unchanged sentences

Weighted Average

For the quarter ended May 28, 2022:

For the quarter ended August 27, 2022:

Basic earnings per share - continuing operations

2 unchanged sentences

Diluted earnings per share - continuing operations

Basic earnings per share - discontinued operations

Basic loss per share - discontinued operations

Add effect of dilutive securities:

Restricted shares

Diluted earnings per share - discontinued operations

For the quarter ended May 29, 2021:

Diluted loss per share - discontinued operations

For the quarter ended August 28, 2021:

Basic earnings per share - continuing operations

2 unchanged sentences

Diluted earnings per share - continuing operations

Basic earnings per share - discontinued operations

Basic loss per share - discontinued operations

Add effect of dilutive securities:

Options and restricted shares

Diluted earnings per share - discontinued operations

For the six months ended May 28, 2022:

Diluted loss per share - discontinued operations

For the nine months ended August 27, 2022:

Basic earnings per share - continuing operations

6 unchanged sentences

Diluted earnings per share - discontinued operations

For the six months ended May 29, 2021:

For the nine months ended August 28, 2021:

Basic earnings per share - continuing operations

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

For the three and six months ended May 28, 2022 and May 29, 2021, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive:

For the three and nine months ended August 27, 2022 and August 28, 2021, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive:

Quarter Ended

Six Months Ended

Nine Months Ended

August 27, 2022

August 28, 2021

August 27, 2022

August 28, 2021

Unvested shares

Discontinued Operations & Assets Held for Sale

Discontinued Operations

4 unchanged sentences

Seller expenses paid at closing

Working capital adjustment paid to buyer

Net proceeds from the sale (2)

To be held in escrow until the first anniversary of the sale, at which time any amount not distributed or reserved for specified claims will be released to the Company.

This amount is included in other current assets in the accompanying condensed consolidated balance sheet at May 28, 2022.

Included in cash flows from investing activities in the accompanying condensed consolidated statement of cash flows for the six months ended May 28, 2022.

The sales price is subject to a customary post-closing working capital adjustment which will be paid during the third quarter of fiscal 2022.

Including the estimated effect of the working capital adjustment, we recognized a pre-tax gain from the sale of Zenith of $ 53,254.

This amount is included in other current assets in the accompanying condensed consolidated balance sheet at August 27, 2022.

Included in cash flows from investing activities in the accompanying condensed consolidated statement of cash flows for the nine months ended August 27, 2022.

The sales price was subject to a customary post-closing working capital adjustment which was paid during the third quarter of fiscal 2022.

Including the effect of the working capital adjustment, we recognized a pre-tax gain from the sale of Zenith of $ 53,061 .

The operations of our logistical services segment, which consisted entirely of the operations of Zenith, are presented in the accompanying condensed consolidated statements of income as discontinued operations, and the assets sold to and liabilities assumed by J.B.

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

23 unchanged sentences

Following the sale of Zenith, certain of Zenith’s liabilities primarily representing reserves and accrued liabilities for pre-disposal workers’

compensation, health insurance, auto liability claims and certain accrued compensation and benefits were retained by Bassett.

These reserves and accruals total $ 1,390 at May 28, 2022 and are included in other current liabilities and accrued expenses in the accompanying condensed consolidated balance sheet.

compensation, health insurance and auto liability claims were retained by Bassett.

The remaining balance of these reserves and accruals total $537 at August 27, 2022 and are included in other current liabilities and accrued expenses in the accompanying condensed consolidated balance sheet.

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2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

The following table summarizes the major classes of line items constituting income of the discontinued operations, as reported in the condensed consolidated statements of income for the three and six months ended May 28, 2022 and May 29, 2021:

Quarter Ended

Six Months Ended

Nine Months Ended

August 27, 2022

August 28, 2021

August 27, 2022

August 28, 2021

Major line items constituting pretax income of discontinued operations:

2 unchanged sentences

Other loss, net

Income from operations of logistical services

Gain on disposal

Income (loss) from operations of logistical services

Gain on disposal (less adjustments)

Pretax income of discontinued operations

Income tax expense

Income from discontinued operations, net of tax

Income tax expense (benefit)

Income (loss) from discontinued operations, net of tax

The amounts for revenue and costs of logistical services shown above represent the results of Zenith’s business transactions with third parties.

Zenith also charged Bassett for logistical services provided to our wholesale segment in the amount of $ 9,121 during the six months ended May 28, 2022, and $ 8,182 and $ 16,245, respectively, for the three and six months ended May 29, 2021.

Zenith also charged Bassett for logistical services provided to our wholesale segment in the amount of $ 9,121 during the nine months ended August 27, 2022, and $ 7,164 and $ 23,409 , respectively, for the three and nine months ended August 28, 2021.

We have entered into a service agreement with J.B.

Hunt for the continuation of these services for a period of seven years following the sale of Zenith.

Subsequent to the sale, we incurred $ 9,546 of expense during the three months ended May 28, 2022 for the performance of logistical services of which $7,893 had been paid in cash as of May 28, 2022.

Subsequent to the sale, we incurred $ 10,307 and $ 19,852 of expense during the three and nine months ended August 27, 2022, respectively, for the performance of logistical services, of which $ 17,818 had been paid in cash as of August 27, 2022.

Included in other loss, net, is interest arising from finance leases assumed by J.B.

Hunt as part of the transaction.

Such interest amounted to $ 78 for the six months ended May 28, 2022, and $ 78 and $ 121, respectively, for the three and six months ended May 29, 2021.

The following table summarizes the cash flows generated by discontinued operations during the six months ended May 28, 2022 and May 29, 2021:

Six Months Ended

Such interest amounted to $ 78 for the nine months ended August 27, 2022, and $ 86 and $ 207 , respectively, for the three and nine months ended August 28, 2021.

The following table summarizes the cash flows generated by discontinued operations during the nine months ended August 27, 2022 and August 28, 2021:

Nine Months Ended

August 27, 2022

August 28, 2021

Cash provided by operating activities

1 unchanged sentence

Cash used in financing activities

Net cash provided by discontinued operations

Retail Real Estate Held for Sale

During the second quarter of fiscal 2022, we entered into a contract to sell one of our Company-owned store locations in Houston, Texas for approximately $ 8,200 net of closing costs.

Accordingly, the $ 3,623 carrying value of the real property at that location is classified as retail real estate held for sale in the accompanying condensed consolidated balance sheet as of May 28, 2022.

The sale closed on June 24, 2022, and we expect to vacate the premises by the end of the third quarter of fiscal 2022.

Net cash provided by (used in) discontinued operations

Retail Real Estate Transactions

During the third quarter of fiscal 2022, we sold one of our Company-owned store locations in Houston, Texas for $ 8,217 net of closing costs, resulting in a gain of $ 4,595 during the three and nine months ended August 27, 2022.

The sale closed on June 24, 2022, and we expect to vacate the premises during the fourth quarter of fiscal 2022.

This store will be relocated to a new leased store in the Houston market that we expect to open during the second quarter of fiscal 2023.

This sale, together with our recent purchase of real property in Tampa, Florida for $ 7,668 in cash during the second quarter of fiscal 2022 will be treated as an exchange of like-kind property under Section 1031 of the Internal Revenue Code of 1986, as amended, for the purpose of deferring the majority of the taxable gain of approximately $ 4,800 arising from the sale of the Houston property.

A VIE was established during the second quarter of fiscal 2022 for purposes of acquiring the Tampa, Florida property, of which the Company is the primary beneficiary by virtue of our control over the activities that most significantly impact the entity's economic performance.

We plan to remodel the Tampa property and open as a Company-owned store in the second quarter of fiscal 2023.

This sale, together with our recent purchase of real property in Tampa, Florida for $ 7,668 in cash during the second quarter of fiscal 2022 will be treated as an exchange of like-kind property under Section 1031 of the Internal Revenue Code of 1986, as amended, for the purpose of deferring approximately $ 4,300 of the taxable gain arising from the sale of the Houston property.

A VIE was established during the second quarter of fiscal 2022 for purposes of acquiring the Tampa, Florida property, of which the Company was the primary beneficiary by virtue of our control over the activities that most significantly impact the entity's economic performance.

Subsequent to the completion of the exchange transactions during the third quarter of fiscal 2022, the sole equity interest in the VIE was transferred to Bassett and the entity is now consolidated as a wholly owned subsidiary We plan to remodel the Tampa property and open as a Company-owned store in the second quarter of fiscal 2023.

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2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

17 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

1 unchanged sentence

Quarter Ended

Six Months Ended

Nine Months Ended

August 27, 2022

August 28, 2021

August 27, 2022

August 28, 2021

Sales Revenue

7 unchanged sentences

Inter-company elimination

Gain on sale of real estate

Depreciation and Amortization

2 unchanged sentences

Retail - Company-owned stores

August 27, 2022

November 27, 2021

Identifiable Assets

9 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 $ 46,391 and $ 51,492 as of May 28, 2022 and November 27, 2021, respectively.

Approximately 90 % of the customer deposits held at November 27, 2021 related to performance obligations that were satisfied during the current year-to-date period and have therefore been recognized in revenue for the three and six months ended May 28, 2022.

These customer deposits are carried on our balance sheet as a current liability until delivery is fulfilled and amounted to $ 40,311 and $ 51,492 as of August 27, 2022 and November 27, 2021, respectively.

Substantially all of the customer deposits held at November 27, 2021 related to performance obligations that were satisfied during the current year-to-date period and have therefore been recognized in revenue for the three and nine months ended August 27, 2022.

Sales commissions are expensed as part of selling, general and administrative expenses at the time revenue is recognized because the amortization period would have been one year or less.

2 unchanged sentences

when the customer’s order is placed) and are carried as prepaid commissions in other current assets until the goods are delivered and revenue is recognized.

At May 28, 2022 and November 27, 2021, our balance of prepaid commissions included in other current assets was $ 5,258 and $ 6,221, respectively.

At August 27, 2022 and November 27, 2021, our balance of prepaid commissions included in other current assets was $ 4,357 and $ 6,221 , respectively.

Page 19 of 36

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

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.

Disaggregated revenue information for sales of furniture and accessories by product category for the three and six months ended May 28, 2022 and May 29, 2021, excluding intercompany transactions between our segments, is a follows:

Disaggregated revenue information for sales of furniture and accessories by product category for the three and nine months ended August 27, 2022 and August 28, 2021, excluding intercompany transactions between our segments, is a follows:

Quarter Ended

August 27, 2022

August 28, 2021

Bassett Custom Upholstery

4 unchanged sentences

Consolidated net sales of furniture and accessories

Six Months Ended

Nine Months Ended

August 27, 2022

August 28, 2021

Bassett Custom Upholstery

4 unchanged sentences

Consolidated net sales of furniture and accessories

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

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

Page 20 of 36

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

1 unchanged sentence

The following changes in our stockholders’

equity occurred during the three and six months ended May 28, 2022 and May 29, 2021:

equity occurred during the three and nine months ended August 27, 2022 and August 28, 2021:

Quarter Ended

Six Months Ended

Nine Months Ended

August 27, 2022

August 28, 2021

August 27, 2022

August 28, 2021

Common Stock:

28 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

AUGUST 27, 2022

(Dollars in thousands except share and per share data)

21 unchanged sentences

We expect that the adoption of this standard will primarily impact our disclosures but do not expect that this guidance will have a material impact upon our financial position and results of operations.

In June 2022, the FASB issued Accounting Standards Update No.

2022-03 –

Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, to clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security.

The amendments in ASU 2022-03 clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction.

In addition, the amendments in ASU 2022-03 require certain additional disclosures related to investments in equity securities subject to contractual sale restrictions.

The amendments in ASU 2022-03 will become effective for us as of the beginning of our 2025 fiscal year.

Early adoption is permitted.

As of August 27, 2022 we do not hold any investments in equity securities, therefore we do not currently expect that this guidance will have a material impact upon our financial position and results of operations.

Subsequent Events

On September 2, 2022, we acquired the capital stock of Noa Home Inc.

(“Noa”), a mid-priced e-commerce furniture retailer headquartered in Montreal, Canada.

Noa has operations in Canada, Australia, Singapore and the United Kingdom and had net revenues of approximately $ 15,300 (approximately C$ 19,100 ) for its most recent fiscal year ended February 28, 2022.

The initial purchase price of approximately $ 5,900 (approximately C$ 7,700 ) included cash payments of approximately $ 1,500 (approximately C$ 2,000 ) paid to the co-founders of Noa and approximately $ 4,300 (approximately C$ 5,700 ) for the repayment of existing debt.

The Noa co-founders will also have the opportunity to receive additional annual cash payments totaling approximately $ 1,000 per year (approximately C$ 1,330 per year) for the following three fiscal years based on established increases in net revenues and achieving certain internal EBITDA goals.

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BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 27, 2022

(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