Note 16 - Restructuring, asset impairment, and other charges

12 Months Ended

Nov. 26, 2011

Restructuring and Related Activities Disclosure [Text Block]

16. Restructuring, asset impairment, and other charges

The following table summarizes the restructuring, asset impairment charges and other unusual items by year:

	2011		2010		2009
Restructuring and asset impairment charges:
Impairment of goodwill (See note 10)	$	-	$	-	$	532
Impairment of leasehold improvements		-		-		1,068
Asset impairment charges related to Company-owned retail store closures		1,156		-		-
Asset impairment charges & demolition costs associated with closed plants		1,312		-		485
Supply contract termination costs associated with fiberboard plant closure		-		-		408
Severance		-		-		494
Other		32		-		-
Total restructuring and asset impairment charges	$	2,500	$	-	$	2,987
Lease exit costs
Lease exit costs related to Company-owned retail store closures	$	1,221	$	-	$	2,434
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	$	-	$	2,434
Licensee debt cancellation charges	$	6,447	$	-	$	-
Total charges related to restructuring, asset impairment, lease exit costs and debt cancellation included in loss from operations	$	12,675	$	-	$	5,421

Total restructuring and asset impairment charges by segment are as follows:

	2011		2010		2009
Wholesale	$	8,653	$	-	$	2,028
Retail		4,022		-		3,393
	$	12,675	$	-	$	5,421

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

	2011			2010
Balance, beginning of the year	$	2,847		$	3,499
Provisions associated with corporate store and retail office closures		2,721			-
Provisions associated with licensee store closings		661			-
Provisions made to adjust previous estimates		1,560			736
Payments on unexpired leases		(2,048	)		(1,488	)
Payment to terminate lease commitment		(1,500	)		-
Accretion of interest on obligations		116			100
Balance, end of the year	$	4,357		$	2,847
Current portion included in other accrued liabilities	$	1,756		$	889
Long-term portion included in other long-term liabilities		2,601			1,958
	$	4,357		$	2,847

Fiscal 2011

Restructuring and Asset Impairment Charges

During fiscal 2011 we recorded asset impairment charges of $2,500. These charges included costs of $318 for the demolition of a previously closed facility in Bassett, Virginia, and $32 associated with the relocation of our retail store in Manchester, Missouri. We also incurred non-cash charges which included: $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; $966 for the write-off of leasehold improvements and other assets due to the closure of six retail locations in Albuquerque, New Mexico; Bear, Delaware; Bel Air, Maryland; Carol Stream, Illinois; Frederick, Maryland; and Spanish Fort, Alabama; and $190 for the write-off of leasehold improvements and other assets associated with the relocation of our store in Manchester, Missouri. Total non-cash impairment charges described above for the year ended November 26, 2011 were $2,150.  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 8.

Lease Exit Costs

During fiscal 2011, we recorded charges of $3,728 for lease exit costs and lease modifications which included: non-cash charges of $1,221 for lease exit costs related to the closure of retail stores in Albuquerque, New Mexico, and in Bel Air and Frederick, Maryland, as well as a previously closed location in Lewisville, Texas; 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.

Licensee Debt Cancellation Charges

During fiscal 2011, we gained significant liquidity as a result of the sale of our investment in IHFC (see Note 11). This liquidity event 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 second fiscal quarter of 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 year ended November 26, 2011 of $6,447.

In addition to the charges discussed above affecting loss from operations during fiscal 2011, other income (loss), net for the year ended November 26, 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 8.

Fiscal 2010

Other than income of $488 from the CDSOA, no restructuring charges or other significant non-recurring items were included in our loss from operations.

Fiscal 2009

In 2009, we recorded non-cash asset impairment charges of $1,068 for the write-off of the remaining leasehold improvements for our Arlington, Texas and Alpharetta, Georgia retail stores as well as the closure of our retail office in Greensboro, North Carolina.  Also included in that amount was a non-cash charge to write-down the carrying value of our long-lived assets associated with an underperforming retail location.

We recorded a $485 non-cash charge to write-down the value of the property and equipment as a result of the fiberboard plant closure in the fourth quarter of 2009.  In addition, we recorded a $408 charge associated with the termination of a power supply contract for the fiberboard plant.  This amount was paid out in 2010.

Lastly, we recorded severance charges of $320 associated with a reduction in workforce announced in March 2009 and $174 associated with the fiberboard plant closure.

These charges were based on ultimate payment amounts and approximated fair value. These amounts were determined based on Level 3 inputs, which include our judgment about future cash flows and other considerations.

There were no accrued restructuring obligations included in the accompanying balance sheets as of November 26, 2011 or November 27, 2010.