Note 15 - Restructuring, Asset Impairment, and Other Charges

9 Months Ended

Aug. 27, 2011

Restructuring, Impairment, and Other Activities Disclosure [Text Block]

15. Restructuring, Asset Impairment, and Other Charges

During the three and nine months ended August 27, 2011 and August 28, 2010, we incurred the following charges included in income (loss) from operations:

	Quarter Ended				Nine Months Ended
	August 27, 2011		August 28, 2010		August 27, 2011		August 28, 2010
Licensee debt cancellation charges	$	-	$	-	$	6,447	$	-
Restructuring and asset impairment charges:
Write-downs and demolition costs related to idle manufacturing facilities	$	123	$	-	$	1,116	$	-
Asset write-downs related to Company-owned retail store closures		-		-		966		-
Total restructuring and asset impairment charges	$	123	$	-	$	2,082	$	-
Lease exit costs:
Lease exit costs related to Company-owned retail store closures	$	-	$	-	$	1,221	$	-
Charge for modification of existing Company-owned retail store lease		-		-		1,500		-
Changes in estimates related to previously closed Company-owned retail stores		-		-		1,007		-
Total lease exit costs	$	-	$	-	$	3,728	$	-
Total charges related to debt cancellation, restructuring, and lease exit costs included in loss from operations	$	123	$	-	$	12,257	$	-

Licensee Debt Cancellation Charges

During the quarter ended May 28, 2011, we gained significant liquidity as a result of the sale of our investment in IHFC (see Note 7). This liquidity event has enabled us to become more opportunistic in managing our relationships with our licensees and therefore accelerate certain licensees’ ability to rebuild their businesses after several years of extremely difficult industry conditions. As such, during the quarter ended May 28, 2011, we cancelled certain debts of what we consider to be key licensees in select markets.  While the debts cancelled were considered to be collectible over time, we believe that, rather than requiring repayment of these obligations, we will realize a greater long-term benefit by the cancellation of these debts. In exchange for relieving the debts of these licensees and thus strengthening their respective financial positions, we believe these licensees will be in a much better position to reinvest in all aspects of their store operations (new product offerings, personnel, advertising, building appeal, etc) which will ultimately lead to increased sales and profitability of the Bassett brand. As a result of this debt cancellation, we incurred a charge for the nine months ended August 27, 2011 of $6,447.

Restructuring and Asset Impairment Charges

During the nine months ended August 27, 2011, we recorded asset impairment charges of $2,082. During the three months ended August 27, 2011 we incurred costs of $123 for the demolition of a previously closed facility in Bassett, Virginia. During the three months ended May 28, 2011 we incurred non-cash charges which included: $87 for the write-off of leasehold improvements related to the closure of a retail store in Albuquerque, New Mexico; $566 for the additional write-down of a previously closed manufacturing facility in Mt. Airy, North Carolina; and $428 for the additional write-down of a previously closed manufacturing facility in Bassett, Virginia. During the three months ended February 26, 2011 we recorded non-cash impairment charges of $879 for the write-off of leasehold improvements and other assets due to the closure of five retail locations in Bear, Delaware; Bel Air, Maryland; Carol Stream, Illinois; Frederick, Maryland; and Spanish Fort, Alabama. Total non-cash impairment charges described above for the nine months ended August 27, 2011 were $1,959.  The write-downs of the previously closed manufacturing facilities are based on our estimates of their fair values.  The inputs into these fair value estimates reflect our market assumptions and are not observable.  Consequently, the inputs are considered to be Level 3 as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosures. See Note 14.

Lease Exit Costs

During the nine months ended August 27, 2011, we recorded charges of $3,728 for lease exit costs and lease modifications, none of which were incurred during the three months ended August 27, 2011. During the three months ended May 28, 2011, we recorded charges of $2,844 which included a non-cash charge of $337 for lease exit costs related to the closure of a retail store in Albuquerque, New Mexico; non-cash charges of $1,007 to reflect reduced estimates of recoverable lease costs at four previously closed retail locations; and a charge of $1,500 for a cash payment made for the modification of an existing lease at one of our Company-owned retail store locations. During the three months ended February 26, 2011, we recorded non-cash charges of $884 for lease exit costs associated with the closure of the Bel Air and Frederick, Maryland stores as well as a previously closed location in Lewisville, Texas.

Other income (loss), net for the nine months ended August 27, 2011 includes non-cash charges of $4,790 for asset impairments and lease termination costs associated with our retail real estate investments, including: asset impairment charges of $2,106 to write down idle retail locations in Henderson, Nevada and Chesterfield, Virginia to appraised values; $1,847 to write off certain tenant improvements deemed to be unrecoverable; $661 related to lease termination costs for a closed licensee store; and $176 related to adjustments of previous estimates. The write-downs of the retail assets are based on our estimates of their fair values.  The inputs into these fair value estimates reflect our market assumptions and are not observable.  Consequently, the inputs are considered to be Level 3 as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosures. See Note 14.

The following table summarizes the activity related to our accrued lease exit costs:

Balance at November 27, 2010	$	2,847
Provisions associated with Company-owned retail store closures		1,221
Provisions associated with licensee store closings		661
Provisions made to adjust previous estimates		1,550
Payments on unexpired leases		(1,444	)
Accretion of interest on obligations		82
Balance at August 27, 2011	$	4,917
Current portion included in other accrued liabilities	$	2,991
Long-term portion included in other long-term liabilities		1,926
	$	4,917