Note 15 - Restructuring, Asset Impairment, and Other Charges

6 Months Ended

May 26, 2012

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

15. Restructuring, Asset Impairment, and Other Charges

During the three and six months ended May 26, 2012 and May 28, 2011, we incurred the following charges included in income (loss) from operations:

	Quarter Ended				Six Months Ended
	May 26, 2012		May 28, 2011		May 26, 2012		May 28, 2011
Licensee debt cancellation charges	$	-	$	6,447	$	-	$	6,447
Restructuring and asset impairment charges:
Write-downs and demolition costs related to idle manufacturing facilities	$	475	$	993	$	588	$	993
Asset write-downs related to Company-owned retail store closures		-		87		123		966
Total restructuring and asset impairment charges	$	475	$	1,080	$	711	$	1,959
Lease exit costs:
Lease exit costs related to Company-owned retail store closures	$	-	$	337	$	228	$	1,221
Charge for modification of existing Company-owned retail store lease		-		1,500		-		1,500
Changes in estimates related to previously closed Company-owned retail stores		131		1,007		131		1,007
Total lease exit costs	$	131	$	2,844	$	359	$	3,728
Total charges related to debt cancellation, restructuring, asset impairment, and lease exit costs included in income (loss) from operations	$	606	$	10,371	$	1,070	$	12,134

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 16). 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 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 three and six months ended May 28, 2011 of $6,447.

Restructuring and Asset Impairment Charges

During the three and six months ended May 26, 2012, we incurred costs of $89 and $203, respectively, associated with the demolition of a previously closed manufacturing facility in Bassett, Virginia; non-cash charges of $385 associated with the write-down of a previously closed manufacturing facility in Mt. Airy, North Carolina; and $-0- and $123, respectively, associated with the write off of abandoned leasehold improvements following the relocation of a retail store near Richmond, Virginia.

During the six months ended May 28, 2011, we recorded non-cash asset impairment charges of $1,959. During the three months ended May 28, 2011, we recorded non-cash asset impairment charges of $1,080 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. 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. During the six months ended May 28, 2011, we recorded non-cash asset 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.

When analyzing our properties for potential impairment, we consider such qualitative factors as our experience in leasing and/or selling real estate properties as well as specific site and local market characteristics. Upon the closure of a Bassett Home Furnishings store, we generally write off all tenant improvements which are only suitable for use in such a store.

Lease Exit Costs

During the six months ended May 26, 2012, we incurred non-cash charges of $228 for lease exit costs associated with the relocation of a retail store near Richmond, Virginia. During the three and six months ended May 26, 2012 we incurred $131 of non-cash charges to reflect reduced estimates of recoverable lease costs at several previously closed retail locations.

During the six months ended May 28, 2011, we recorded charges of $3,728 for lease exit costs and lease modifications. 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 six months ended May 28, 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.

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

Balance at November 26, 2011	$	4,358
Provisions associated with Company-owned retail store closures		228
Provisions made to adjust previous estimates		237
Payments on unexpired leases		(1,147	)
Accretion of interest on obligations		77
Balance at May 26, 2012	$	3,753
Current portion included in other accrued liabilities	$	1,999
Long-term portion included in other long-term liabilities		1,754
	$	3,753