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Item 1. Financial Statements

2023-06-29 compared with 2023-03-30 · 135 added, 136 removed, 402 unchanged (40% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED FEBRUARY 25, 2023 AND FEBRUARY 26, 2022 –

FOR THE PERIODS ENDED MAY 27, 2023 AND MAY 28, 2022 –

(In thousands)

Three Months Ended

February 25, 2023

February 26, 2022

Six Months Ended

Operating activities:

1 unchanged sentence

Depreciation and amortization

Gain on disposal of discontinued operations

Gain on revaluation of contingent consideration

Deferred income taxes

6 unchanged sentences

Obligations under operating leases

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Investing activities:

1 unchanged sentence

Proceeds from sales of property and equipment

Net cash used in investing activities

Proceeds from the disposal of discontinued operations, net

Net cash provided by (used in) investing activities

Financing activities:

13 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

7 unchanged sentences

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

During the second and third fiscal quarters of 2022, 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 Tampa, Florida, for $ 7,668 during the second quarter of 2022 and the sale of real property in Houston, Texas for $ 8,217 during the third quarter of 2022 for the purpose of deferring approximately $ 4,300 of the taxable gain resulting from the sale of the Houston property.

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.

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.

4 unchanged sentences

The sale was completed on February 28, 2022.

Accordingly, the operations of our logistical services segment for the three months ended February 26, 2022 are presented in the accompanying condensed consolidated statements of income as discontinued operations.

Accordingly, the operations of our logistical services segment for the three and six months ended May 28, 2022 are presented in the accompanying condensed consolidated statements of income as discontinued operations.

See Note 12, Discontinued Operations, for additional information.

Costs incurred by Bassett for logistical services performed for Bassett by Zenith were included in selling, general and administrative expenses for the three months ended February 26, 2022.

Costs incurred by Bassett for logistical services performed for Bassett by Zenith were included in selling, general and administrative expenses for the six months ended May 28, 2022.

On September 2, 2022, we acquired 100 % of the capital stock of Noa Home Inc.

6 unchanged sentences

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

The results of operations for the three months ended February 25, 2023 are not necessarily indicative of results for the full fiscal year.

The results of operations for the three and six months ended May 27, 2023 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 26, 2022.

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 rate was 36.8 % and 26.3 % for the three months ended February 25, 2023 and February 26, 2022, respectively.

These effective rates differ from the federal statutory rate of 21 % primarily due to increases in the valuation allowance placed on deferred tax assets associated with Noa Home, the effects of state income taxes and various permanent differences.

Non-cash Investing and Financing Activity

During the three months ended February 25, 2023 and February 26, 2022, $ 3,406 and $ 4119 , respectively, of lease right-of- use assets were added through the recognition of the corresponding lease obligations.

Our effective tax rate was 18.4 % and 27.1 % for the three and six months ended May 27, 2023, respectively, and 26.0 % for both the three and six months ended May 28, 2022.

The effective rates for the three and six months ended May 27, 2023 differ from the federal statutory rate of 21 % primarily due to the non-taxable gain on revaluation of contingent consideration associated with the acquisition of Noa Home (see Note 3), increases in the valuation allowance placed on deferred tax assets associated with Noa Home and the effects of state income taxes and various permanent differences.

For the three and six months ended May 28, 2022, the 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 $ 522 associated with the non-deductible goodwill written off in connection with the sale of Zenith and included in income tax on discontinued operations.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

Non-cash Investing and Financing Activity

During the six months ended May 27, 2023 and May 28, 2022, $ 3,881 and $ 6,049 , respectively, of lease right-of-use assets were added through the recognition of the corresponding lease obligations.

Business Combinations

On September 2, 2022, we acquired 100 % of the capital stock of Noa Home Inc.

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

On September 2, 2022, we acquired 100 % of the capital stock of Noa Home, a mid-priced e-commerce furniture retailer headquartered in Montreal, Canada.

Noa Home has operations in Canada, Australia, Singapore and the United Kingdom.

The initial purchase price (denominated in Canadian dollars) of approximately C$ 7,700 included cash payments of C$ 2,000 paid to the co-founders of Noa Home and approximately C$ 5,700 for the repayment of existing debt owed by Noa Home.

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

Per the terms of the agreement at the acquisition date, the Noa Home co-founders also had the opportunity to receive additional cash payments totaling approximately C$ 1,330 per year for the three fiscal years following the year of acquisition based on established increases in net revenues and achieving certain internal EBITDA goals.

Under the acquisition method of accounting, the fair value of the consideration transferred was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date with the remaining unallocated amount recorded as goodwill.

2 unchanged sentences

The primary areas of the preliminary allocation of the fair value of consideration transferred that are not yet finalized relate to the fair values of certain tangible and intangible assets acquired and the residual goodwill.

As of February 25, 2023, there have been no changes to the preliminary allocation of the purchase price (translated into U.S.

As of May 27, 2023, there have been no changes to the preliminary allocation of the purchase price (translated into U.S.

dollars as of the acquisition date) which is as follows:

The following is a collective summary of the purchase price allocations for those acquisitions:

Fair value of consideration transferred in exchange for 100% of Noa Home:

Fair value of contingent consideration payable

Total fair value of consideration paid or payable

Fair value of consideration given in exchange for 100% of Noa Home:

Fair value of contingent consideration as of acquisition date

Total fair value of consideration given

Allocation of the fair value of consideration transferred:

11 unchanged sentences

Total net assets acquired

Goodwill was determined based on the residual difference between the fair value of the consideration transferred and the value assigned to the tangible and intangible assets and liabilities recognized in connection with the acquisition and is deductible for tax purposes.

Among the factors that contributed to a purchase price resulting in the recognition of goodwill are the expected synergies arising from combining the Company’s manufacturing and distribution capabilities with Noa Home’s position in the international e-commerce market for home furnishings and accessories.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

A portion of the fair value of the consideration transferred in the amount of $ 1,929 has been assigned to the identifiable intangible asset associated with the Noa Home trade name.

This intangible asset is considered to have an indefinite life.

The indefinite-lived intangible asset and goodwill are not amortized but will be tested for impairment annually or between annual tests if an indicator of impairment exists.

The indefinite-lived intangible asset and goodwill are not amortized but will be tested for impairment annually or between annual tests if an indicator of impairment exists and the Company determines it is more likely than not that the fair value of the goodwill is below its book value.

The fair values of consideration transferred and net assets acquired were determined using a combination of Level 2 and Level 3 inputs as specified in the fair value hierarchy in ASC 820, Fair Value Measurements and Disclosures .

The revenues and results of operations of Noa Home for the three months ended February 25, 2023 were not material.

The pro forma impact of the acquisition has not been presented because it was not material to our consolidated results of operations for the three months ended February 26, 2022.

Subsequent to the acquisition date, the parties concluded that the targets originally set forth by which the Noa Home co-founders were to earn the contingent consideration would likely not be met within the initially anticipated time frame.

Therefore, we have agreed to replace the contingent consideration with two fixed payments of C$ 200 each, payable in June of 2023 and December of 2024.

As a result of the write-down of the contingent consideration payable that was recognized at the acquisition date, we recorded a gain of $ 1,013 for the three and six months ended May 27, 2023.

The revenues and results of operations of Noa Home for the three and six months ended May 27, 2023 were not material.

The pro forma impact of the acquisition has not been presented because it was not material to our consolidated results of operations for the three and six months ended May 28, 2022.

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 $ 17,725 and $ 17,715 at February 25, 2023 and November 26, 2022 consisted of CDs.

At February 25, 2023, the CDs had original terms averaging eight months, bearing interest at rates ranging from 0.3 % to 4.75 %.

At February 25, 2023, the weighted average remaining time to maturity of the CDs was approximately five months and the weighted average yield of the CDs was approximately 4.29 %.

Our short-term investments of $ 17,725 and $ 17,715 at May 27, 2023 and November 26, 2022 consisted of CDs.

At May 27, 2023, the CDs had original terms averaging seven months, bearing interest at rates ranging from 0.7 % to 5.05 %.

At May 27, 2023, the weighted average remaining time to maturity of the CDs was approximately three months and the weighted average yield of the CDs was approximately 4.41 %.

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 25, 2023 and November 26, 2022 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 May 27, 2023 and November 26, 2022 approximates their fair value.

Accounts Receivable

Accounts receivable consists of the following:

February 25, 2023

November 26, 2022

2 unchanged sentences

Accounts receivable, net

We maintain an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments.

The allowance for credit losses is based on a review of specifically identified accounts in addition to an overall aging analysis which is applied to accounts pooled on the basis of similar risk characteristics.

Judgments are made with respect to the collectibility of accounts receivable within each pool based on historical experience, current payment practices and current economic trends based on our expectations over the expected life of the receivables, which is generally ninety days or less.

Actual credit losses could differ from those estimates.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

Activity in the allowance for credit losses for the three months ended February 25, 2023 was as follows:

We maintain an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments.

Judgments are made with respect to the collectability of accounts receivable within each pool based on historical experience, current payment practices and current economic trends based on our expectations over the expected life of the receivables, which is generally ninety days or less.

Actual credit losses could differ from those estimates.

Activity in the allowance for credit losses for the six months ended May 27, 2023 was as follows:

Balance at November 26, 2022

1 unchanged sentence

Write-offs against allowance

Balance at February 25, 2023

Balance at May 27, 2023

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

4 unchanged sentences

Inventories were comprised of the following:

February 25, 2023

November 26, 2022

6 unchanged sentences

Reserve for excess and obsolete inventory

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)

We estimate an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand, market conditions and the respective valuations at LIFO.

9 unchanged sentences

Retail reserves are based on accessory and clearance floor sample inventory in our stores and any inventory that is not associated with a specific customer order in our retail warehouses.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

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

Wholesale Segment

Retail Segment

1 unchanged sentence

Additions charged to expense

Balance at February 25, 2023

Balance at May 27, 2023

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

2 unchanged sentences

Goodwill and other intangible assets consisted of the following:

February 25, 2023

Gross Carrying Amount

Accumulated Amortization

Intangible Assets, Net

Gross Carrying

Intangibles subject to amortization

3 unchanged sentences

November 26, 2022

Gross Carrying Amount

Accumulated Amortization

Intangible Assets, Net

Gross Carrying

Intangibles subject to amortization

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

3 unchanged sentences

Foreign currency translation adjustments

Balance as of February 25, 2023

Accumulated impairment losses at both February 25, 2023 and November 26, 2022 were $ 3,897 .

Amortization expense associated with intangible assets during the three months ended February 25, 2023 and February 26, 2022 was as follows:

Balance as of May 27, 2023

Accumulated impairment losses at both May 27, 2023 and November 26, 2022 were $ 3,897 .

Due to the decline in the share price of our common stock through the end of the second quarter of 2023, we performed a qualitative analysis of our goodwill as of May 27, 2023 and concluded that it was not more likely than not that the carrying value of our reporting units with goodwill exceeded their fair values.

Amortization expense associated with intangible assets during the three and six months ended May 27, 2023 and May 28, 2022 was as follows:

Quarter Ended

February 25, 2023

February 26, 2022

Six Months Ended

Intangible asset amortization expense

Estimated future amortization expense for intangible assets that exist at February 25, 2023 is as follows:

Estimated future amortization expense for intangible assets that exist at May 27, 2023 is as follows:

Remainder of fiscal 2023

1 unchanged sentence

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

At February 25, 2023, we had $ 3,731 outstanding under standby letters of credit against our line, leaving availability under our credit line of $ 21,269 .

In addition, we had outstanding standby letters of credit with another bank totaling $ 250 at February 25, 2023.

At May 27, 2023, we had $ 3,731 outstanding under standby letters of credit against our line, leaving availability under our credit line of $ 21,269 .

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 February 25, 2023 and expect to remain in compliance for the foreseeable future.

We were in compliance with these covenants at May 27, 2023 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.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(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 $ 6,007 and $ 5,987 as of February 25, 2023 and November 26, 2022, respectively.

The liability for the Supplemental Plan was $ 6,028 and $ 5,987 as of May 27, 2023 and November 26, 2022, 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 $ 1,300 and $ 1,275 as of February 25, 2023 and November 26, 2022, respectively.

The liability for the LTC Awards was $ 1,325 and $ 1,275 as of May 27, 2023 and November 26, 2022, respectively.

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

February 25, 2023

November 26, 2022

2 unchanged sentences

Total pension liability

Components of net periodic pension costs for our defined benefit plans for the three months ended February 25, 2023 and February 26, 2022 are as follows:

Components of net periodic pension costs for our defined benefit plans for the three and six months ended May 27, 2023 and May 28, 2022 are as follows:

Quarter Ended

February 25, 2023

February 26, 2022

Six Months Ended

Interest cost

6 unchanged sentences

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

Our liability under this plan was $ 1,626 and $ 1,616 as of February 25, 2023 and November 26, 2022, respectively.

Our liability under this plan was $ 1,636 and $ 1,616 as of May 27, 2023 and November 26, 2022, 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 $ 2,447 and $ 2,070 as of February 25, 2023 and November 26, 2022, respectively.

Our liability under this plan, including both accrued Company contributions and participant salary deferrals, was $ 2,457 and $ 2,070 as of May 27, 2023 and November 26, 2022, respectively.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(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:

February 25, 2023

November 26, 2022

2 unchanged sentences

Total deferred compensation liability

We recognized expense under our deferred compensation arrangements during the three months ended February 25, 2023 and February 26, 2022 as follows:

We recognized expense under our deferred compensation arrangements during the three and six months ended May 27, 2023 and May 28, 2022 as follows:

Quarter Ended

February 25, 2023

February 26, 2022

Six Months Ended

Deferred compensation expense (benefit)

3 unchanged sentences

Lease Guarantees

We were contingently liable under a licensee lease obligation guarantee in the amounts of $ 1,889 and $ 1,880 at February 25, 2023 and November 26, 2022, respectively.

We were contingently liable under a licensee lease obligation guarantee in the amounts of $ 1,897 and $ 1,880 at May 27, 2023 and November 26, 2022, respectively.

The remaining term under this lease guarantee extends for five years.

1 unchanged sentence

The proceeds of the above options are expected to cover the estimated amount of our future payments under the guarantee obligation, net of recorded reserves.

The fair value of this lease guarantee (an estimate of the cost to the Company to perform on the guarantee) at February 25, 2023 and November 26, 2022 was not material.

The fair value of this lease guarantee (an estimate of the cost to the Company to perform on the guarantee) at May 27, 2023 and November 26, 2022 was not material.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

2 unchanged sentences

Weighted Average

For the quarter ended February 25, 2023:

For the quarter ended May 27, 2023:

Basic earnings per share - continuing operations

2 unchanged sentences

Diluted earnings per share - continuing operations

For the quarter ended February 26, 2022:

For the quarter ended May 28, 2022:

Basic earnings per share - continuing operations

2 unchanged sentences

Diluted earnings per share - continuing operations

Basic loss per share - discontinued operations

Basic earnings per share - discontinued operations

Add effect of dilutive securities:

Options and restricted shares

Diluted loss per share - discontinued operations

For the three months ended February 25, 2023 and February 26, 2022, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive:

Diluted earnings per share - discontinued operations

For the six months ended May 27, 2023:

Basic earnings per share - continuing operations

Add effect of dilutive securities:

Restricted shares

Diluted earnings per share - continuing operations

For the six months ended May 28, 2022:

Basic earnings per share - continuing operations

Add effect of dilutive securities:

Options and restricted shares

Diluted earnings per share - continuing operations

Basic earnings per share - discontinued operations

Add effect of dilutive securities:

Options and restricted shares

Diluted earnings per share - discontinued operations

For the three and six months ended May 27, 2023 and May 28, 2022, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive:

Quarter Ended

February 25, 2023

February 26, 2022

Six Months Ended

Unvested shares

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)

Discontinued Operations

1 unchanged sentence

The sale was completed on February 28, 2022.

Subsequent to the first quarter of fiscal 2022 and through the end of fiscal 2022, we received the following net proceeds:

During the second quarter of fiscal 2022, we received the following net proceeds:

Sales price prior to post-closing working capital adjustment

1 unchanged sentence

Seller expenses paid at closing

Working capital adjustment paid to buyer

Net proceeds from the sale

This was held in escrow until the first anniversary of the sale, at which time the full amount was released to the Company on March 2, 2023.

As of February 25, 2023 and November 26, 2022, this amount is included in other current assets in the accompanying condensed consolidated balance sheets.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

The sales price was subject to customary post-closing working capital adjustments which were paid during the second half of fiscal 2022 and resulted in a pre-tax gain from the sale of Zenith of $ 52,534 recognized subsequent to the first quarter of fiscal 2022.

As of November 26, 2022, this amount is included in other current assets in the accompanying condensed consolidated balance sheets.

The sales price was subject to customary post-closing working capital adjustments.

For the three and six months ended May 28, 2022 we recognized a pre-tax gain on the sale of $ 53,254 which included a preliminary estimate of the post-closing adjustments.

Upon settlement of the post-closing adjustments, which were paid in the second half of fiscal 2022, the final pre-tax gain was $ 52,534 .

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.

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 months ended February 26, 2022:

Quarter Ended

February 26, 2022

Six Months Ended

Major line items constituting pretax income of discontinued operations:

3 unchanged sentences

Income from operations of logistical services

Gain on disposal

Pretax income of discontinued operations

Income tax expense

1 unchanged sentence

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 three months ended February 26, 2022.

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.

Upon the sale of Zenith we entered into a service agreement with J.B.

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

We incurred $ 8,434 of expense during the three months ended February 25, 2023 for logistical services performed by J.B.

We incurred expense for logistical services performed by J.B.

Hunt of $ 6,717 and $ 14,094 during the three and six months ended May 27, 2023, respectively, and $ 9,546 for the three and six months ended May 28, 2022, respectively.

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 three months ended February 26, 2022.

The following table summarizes the cash flows generated by discontinued operations during the three months ended February 26, 2022:

Three Months Ended

February 26, 2022

Cash provided by operating activities

Cash used in investing activities

Cash used in financing activities

Net cash provided by discontinued operations

Such interest amounted to $ 78 for the six months ended May 28, 2022.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

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

Six Months Ended

Cash provided by operating activities

Cash used in investing activities

Cash used in financing activities

Net cash provided by discontinued operations

Segment Information

Beginning with the three months ended February 25, 2023, we have strategically aligned our business into three reportable segments as defined in ASC 280, Segment Reporting , and as described below:

As of the beginning of fiscal 2023 we have strategically aligned our business into three reportable segments as defined in ASC 280, Segment Reporting , and as described below:

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.

11 unchanged sentences

The inter-company income elimination also includes rent paid by our retail stores occupying Company-owned real estate.

Prior to the current period, the functions included in Corporate and other were included in our wholesale segment reportable segment, and Noa Home was included in our retail reportable segment for the fourth quarter of fiscal 2022 following its acquisition on September 2, 2022.

Prior to the beginning of fiscal 2023, the functions included in Corporate and other were included in our wholesale segment reportable segment, and Noa Home was included in our retail reportable segment for the fourth quarter of fiscal 2022 following its acquisition on September 2, 2022.

We believe that the new alignment of our reporting segments provides our chief operating decision maker with clearer information with which to assess the operating results of our wholesale segment.

Noa Home does not meet the requirements to be a separate reportable segment as it is below the thresholds of the revenue, income and asset tests.

The segment information presented below for the three months ended February 26, 2022 and as of November 26, 2022 has been restated to reflect the new alignment of our reportable segments.

The segment information presented below for the three and six months ended May 28, 2022 and as of November 26, 2022 has been restated to reflect the new alignment of our reportable segments.

Our former logistical services segment which represented the operations of Zenith is now presented as a discontinued operation in the accompanying condensed consolidated balances sheets and statements of income (see Note 12).

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

1 unchanged sentence

Quarter Ended

February 25, 2023

February 26, 2022

Six Months Ended

Sales Revenue

9 unchanged sentences

Inter-company elimination

Gain on revaluation of contingent consideration

Depreciation and Amortization

5 unchanged sentences

Identifiable Assets

February 25, 2023

November 26, 2022

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 $ 31,040 and $ 35,963 as of February 25, 2023 and November 26, 2022, respectively.

Approximately 81 % of the customer deposits held at November 26, 2022 related to performance obligations that were satisfied during the current year-to-date period and have therefore been recognized in revenue for the three months ended February 25, 2023.

These customer deposits are carried on our balance sheet as a current liability until delivery is fulfilled and amounted to $ 23,941 and $ 35,963 as of May 27, 2023 and November 26, 2022, respectively.

Substantially all of the customer deposits held at November 26, 2022 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 27, 2023.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

3 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 February 25, 2023 and November 26, 2022, our balance of prepaid commissions included in other current assets was $ 3,145 and $ 3,768 , respectively.

At May 27, 2023 and November 26, 2022, our balance of prepaid commissions included in other current assets was $ 2,399 and $ 3,768 , respectively.

We exclude from revenue all amounts collected from customers for sales tax.

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 months ended February 25, 2023 and February 26, 2022, 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 six months ended May 27, 2023 and May 28, 2022, excluding intercompany transactions between our segments, is a follows:

Quarter Ended

February 25, 2023

February 26, 2022

Corporate & Other (2)

Corporate & Other

Bassett Custom Upholstery

4 unchanged sentences

Consolidated net sales of furniture and accessories

Six Months Ended

Corporate & Other (2)

Corporate & Other

Bassett Custom Upholstery

Bassett Leather

Bassett Custom Wood

Bassett Casegoods

Accessories, mattresses and other (1)

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.

Our Corporate and other segment for the three months ended February 25, 2023 includes the sales of Noa Home, which was acquired on September 2, 2023 (see Note 3).

Our Corporate and other segment for the three and six months ended May 27, 2023 includes the sales of Noa Home, which was acquired on September 2, 2023 (see Note 3).

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(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 25, 2023 and February 26, 2022:

equity occurred during the three and six months ended May 27, 2023 and May 28, 2022:

Quarter Ended

February 25, 2023

February 26, 2022

Six Months Ended

Common Stock:

25 unchanged sentences

End of period

The balance of cumulative translation adjustments, net of tax, was a net loss of $ 340 and $ 204 at February 25, 2023 and November 26, 2022, respectively.

The balance of cumulative translation adjustments, net of tax, was a net loss of $ 409 and $ 204 at May 27, 2023 and November 26, 2022, respectively.

PART I-FINANCIAL INFORMATION-CONTINUED

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(Dollars in thousands except share and per share data)

30 unchanged sentences

Early adoption is permitted.

As of February 25, 2023 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.

As of May 27, 2023 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.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED

FEBRUARY 25, 2023

(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