Note 11 - Unconsolidated Affiliated Companies

12 Months Ended

Nov. 26, 2011

Equity Method Investments Disclosure [Text Block]

11. Unconsolidated Affiliated Companies

International Home Furnishings Center

On May 2, 2011 we sold our 46.9% interest in International Home Furnishings Center, Inc. (“IHFC”) to International Market Centers, L.P. (“IMC”).  Consideration received, the balance of our investment in IHFC at the time of sale, and the resulting gain from the sale are as follows:

Gain of sale on affiliate:
Consideration received:
Cash	$	69,152
Tax escrow receivable (1)		1,413
Indemnification escrow receivable (2)		4,695
Investment in IMC (3)		1,000
Total consideration received	$	76,260
Investment in IHFC:
Distributions in excess of affiliate earnings		9,282
Gain on sale of affiliate	$	85,542

(1) Included in other current assets in the accompanying consolidated balance sheet at November 26,  2011.

(2) $2,348 included in other current assets in the accompanying consolidated balance sheet at November 26, 2011, with the remainder included in other assets.

(3) Included in other assets in the accompanying consolidated balance sheet at November 26, 2011.

The tax escrow receivable represents the portion of escrowed sales proceeds expected to be released to us after the settlement of certain outstanding IHFC tax obligations. In addition, $4,695 of proceeds was placed in escrow to indemnify the purchaser with respect to various contingencies.  Any unused portions of these escrowed funds will be released to us over a three year period.  Also in connection with the sale, we acquired a minority equity stake in IMC in exchange for $1,000.  IMC is majority owned by funds managed by Bain Capital Partners and a subsidiary of certain investment funds managed by Oaktree Capital Management, L.P.  Our investment in IMC is accounted for using the cost method as we do not have significant influence over IMC.

IHFC owned and leased out floor space in a showroom facility in High Point, North Carolina. Prior to the sale of our investment in IHFC, we accounted for the investment using the equity method since we did not maintain operating control of IHFC.  At November 27, 2010, our investment reflected a credit balance of $7,356 which is presented in the liabilities section in the accompanying consolidated balance sheets as “distributions in excess of affiliate earnings”. The negative book value resulted from IHFC’s previous refinancing of its real estate based on the market value of the property and using the proceeds to pay a special dividend to its owners.  We recorded income and received dividends from IHFC as follows:

	2011		2010		2009
Earnings Recognized	$	1,832	$	4,535	$	4,705
Dividends Received		3,756		937		3,749

Summarized financial information for IHFC is as follows:

		2011*		2010		2009
Current assets	$	-	$	22,575	$	21,002
Non-current assets		-		43,892		43,448
Current liabilities		-		13,163		9,371
Long-term liabilities		-		105,526		113,000
Revenues		19,955		39,518		40,618
Net income		3,470		9,680		10,042

*No balance sheet information is reported as of November 26, 2011 as we no longer

  have any ownership interest in IHFC, and IHFC no longer exists as a stand-alone legal entity.

  Revenues and net income are reported for the five month period ended May 2, 2011.

The complete financial statements of IHFC are included in our annual report on Form 10-K.

Zenith Freight Lines, LLC

We own 49% of Zenith Freight Lines, LLC, (“Zenith”) which provides domestic transportation and warehousing services primarily to furniture manufacturers and distributors and also provides home delivery services to furniture retailers.  We have contracted with Zenith to provide for substantially all of our domestic freight, transportation and warehousing needs for the wholesale business.  In addition, Zenith provides home delivery services for several of our Company-owned retail stores. Our investment in Zenith was $6,137 at November 26, 2011 and $5,147 at November 27, 2010 and is recorded in other long-term assets. During the second quarter of 2011, we made an additional cash investment of $980, which represented our 49% share of a total $2,000 equity contribution to Zenith to partially fund their acquisition of a warehouse facility. We paid Zenith approximately $19,499, $19,286 and $19,469, for freight expense and logistical services in 2011, 2010, and 2009, respectively.  At November 26, 2011 and November 27, 2010, we owed Zenith $1,147 and $1,512, respectively, for services rendered to us. We believe the transactions with Zenith are at current market rates. We recorded the following earnings (losses) in income from unconsolidated affiliated companies, net in our consolidated statements of operations:

	2011		2010		2009
Earnings (Loss) Recognized	$	8	$	165	$	362
Dividends Received		-		-		98