Note 15 - Restructuring, Asset Impairment, and Other Charges

9 Months Ended

Aug. 25, 2012

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

15. Restructuring, Asset Impairment, and Other Charges

During the three and nine months ended August 25, 2012 and August 27, 2011, we incurred the following charges included in income (loss) from operations:

	Quarter Ended				Nine Months Ended
	August 25, 2012		August 27, 2011		August 25, 2012		August 27, 2011
Licensee debt cancellation charges	$	-	$	-	$	-	$	6,447
Restructuring and asset impairment charges:
Write-downs and demolition costs related to idle manufacturing facilities	$	-	$	123	$	588	$	1,116
Asset write-downs related to Company-owned retail store closures		-		-		123		966
Total restructuring and asset impairment charges	$	-	$	123	$	711	$	2,082
Lease exit costs:
Lease exit costs related to Company-owned retail store closures	$	-	$	-	$	228	$	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		-		-		131		1,007
Total lease exit costs	$	-	$	-	$	359	$	3,728
Total charges related to debt cancellation, restructuring, asset impairment, and lease exit costs included in income (loss) from operations	$	-	$	123	$	1,070	$	12,257

Licensee Debt Cancellation Charges

During the nine months ended August 27, 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 nine months ended August 27, 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 25, 2012, we incurred costs of $203 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 $123 associated with the write off of abandoned leasehold improvements following the relocation of a retail store near Richmond, Virginia.

During the three months ended August 27, 2011, we recorded non-cash asset impairment charges of $123 associated with the demolition of a previously closed manufacturing facility in Bassett, Virginia. During the nine months ended August 27, 2011, we recorded non-cash asset impairment charges of $2,082, which included $966 for the write-off of leasehold improvements related 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; $566 for the additional write-down of a previously closed manufacturing facility in Mt. Airy, North Carolina; and $550 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.

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 nine months ended August 25, 2012, we incurred non-cash charges of $228 for lease exit costs associated with the relocation of a retail store near Richmond, Virginia, as well as $131 of non-cash charges to reflect reduced estimates of recoverable lease costs at several previously closed retail locations.

During the nine months ended August 27, 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, Bel Air and Frederick, Maryland,  and 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.

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		210
Payments on unexpired leases		(1,752	)
Accretion of interest on obligations		116
Balance at August 25, 2012	$	3,160
Current portion included in other accrued liabilities	$	1,813
Long-term portion included in other long-term liabilities		1,347
	$	3,160