Post-Employment Benefit Obligations

Management Savings Plan

May 1, 2017,

our Board of Directors, upon the recommendation of the Organization, Compensation and Nominating Committee (the “Committee”), adopted the Bassett Furniture Industries, Incorporated Management Savings Plan (the “Plan”).The Plan is an unfunded, nonqualified deferred compensation plan maintained for the benefit of certain highly compensated or management level employees.

The Plan is an account-based plan under which (i) participants

may

defer voluntarily the payment of current compensation to future years (“participant deferrals”) and (ii) the Company

may

make annual awards to participants payable in future years (“Company contributions”). The Plan permits each participant to defer up to

75%

of base salary and up to

100%

of any incentive compensation or other bonus, which amounts would be credited to a deferral account established for the participant. Such deferrals will be fully vested at the time of the deferral. Participant deferrals will be indexed to

one

or more deemed investment alternatives chosen by the participant from a range of alternatives made available under the Plan. Each participant

’s account will be adjusted to reflect gains and losses based on the performance of the selected investment alternatives. A participant

may

receive distributions from the Plan: (

) upon separation from service, in either a lump sum or annual installment payments over up to a

year period, as elected by the participant, (

) upon death or disability, in a lump sum, or (

) on a date or dates specified by the participant (“scheduled distributions”) with such scheduled payments made in either a lump sum or substantially equal annual installments over a period of up to

five

years, as elected by the participant. Participant contributions commenced during the

third

quarter of fiscal

2017.

Company contributions will vest in full (

) on the

third

anniversary of the date such amounts are credited to the participant’s account, (

) the date that the participant reaches age

or (

) upon death or disability. Company contributions are subject to the same rules described above regarding the crediting of gains or losses from deemed investments and the timing of distributions. The Company plans to make a contribution to the Plan effective

February 1, 2018.

Expense associated with the planned Company contribution was

$55

for the year ended

November 25, 2017.

May 2, 2017,

we made Long Term Cash Awards (“LTC Awards”) totaling

$2,000

under the Plan to certain management employees in the amount of

$400

each. The LTC Awards vest in full on the

first

anniversary of the date of the award if the participant has reached age

by that time, or, if later, on the date the participant reaches age

63,

provided in either instance that the participant is still employed by the Company at that time. If

not

previously vested, the awards will also vest immediately upon the death or disability of the participant prior to the participant

’s separation from service. The awards will be payable in

equal annual installments following the participant’s death, disability or separation from service. We are accounting for the LTC Awards as a defined benefit pension plan.

During fiscal

2017,

we invested $

431

in life insurance policies covering all participants in the Plan. At

November 25, 2017,

these policies have a net death benefit of

$14,998

for which the Company is the sole beneficiary. These policies are intended to provide a source of funds to meet the obligations arising from the deferred compensation and LTC Awards under the Plan, and serve as an economic hedge of the financial impact of changes in the liabilities. They are held in an irrevocable trust but are subject to claims of creditors in the event of the Company’s insolvency.

Supplemental Retirement Income Plan

We have an unfunded Supplemental Retirement Income Plan (the “Supplemental Plan”) that covers

one

current and certain former executives. Upon retirement, the Supplemental Plan provides for lifetime monthly payments in an amount equal to

65%

of the participant

’s final average compensation as defined in the Supplemental Plan, which is reduced by certain social security benefits to be received and other benefits provided by us. The Supplemental Plan also provides a death benefit that is calculated as (a) prior to retirement death, which pays the beneficiary

50%

of final average annual compensation for a period of

120

months, or (b) post-retirement death, which pays the beneficiary

200%

of final average compensation in a single payment. We own life insurance policies on these executives with a current net death benefit of

$2,829

November 25, 2017

and we expect to substantially fund this death benefit through the proceeds received upon the death of the executive. Funding for the remaining cash flows is expected to be provided through operations. There are

benefits payable as a result of a termination of employment for any reason other than death or retirement, other than a change of control provision which provides for the immediate vesting and payment of the retirement benefit under the Supplemental Plan in the event of an employment termination resulting from a change of control.

Aggregated s

ummarized information for the Supplemental Plan and the LTC Awards, measured as of the end of each year presented, is as follows:

	2017			2016
Change in Benefit Obligation:
Projected benefit obligation at beginning of year	$	11,863		$	11,678
Service cost		1,117			146
Interest cost		449			423
Actuarial (gains) losses		(447	)		165
Benefits paid		(660	)		(549	)
Projected benefit obligation at end of year	$	12,322		$	11,863

Accumulated Benefit Obligation	$	11,531		$	11,138

Discount rate used to value the ending benefit obligations:		3.50	%		3.75	%

Amounts recognized in the consolidated balance sheet:
Current liabilities	$	778		$	776
Noncurrent liabilities		11,544			11,087
Total amounts recognized	$	12,322		$	11,863
Amounts recognized in accumulated other comprehensive income:
Transition obligation	$	42		$	85
Prior service cost		858			-
Actuarial loss		3,286			4,065
Net amount recognized	$	4,186		$	4,150

Total recognized in net periodic benefit cost and accumulated other comprehensive income:	$	1,119		$	734

	2017			2016			2015

Components of Net Periodic Pension Cost:
Service cost	$	186		$	146		$	105
Interest cost		449			423			374
Amortization of transition obligation		42			42			42
Amortization of prior service cost		73			-			-
Amortization of other loss		332			323			195

Net periodic pension cost	$	1,082		$	934		$	716


Assumptions used to determine net periodic pension cost:
Discount rate		3.75	%		3.75	%		3.75	%
Increase in future compensation levels		3.00	%		3.00	%		3.00	%

Estimated Future Benefit Payments (with mortality):
Fiscal 2018							778
Fiscal 2019							735
Fiscal 2020							691
Fiscal 2021							649
Fiscal 2022							999
Fiscal 2023 through 2027							4,248

Of the $

4,186

recognized in accumulated other comprehensive income at

November 25, 2017,

amounts expected to be recognized as components of net periodic pension cost during fiscal

2018

are as follows:

Transition obligation	$	42
Prior service cost		126
Other loss		261

Total expected to be amortized to net periodic pension cost in 2018	$	429

The components of net periodic pension cost other than the service cost component are included in other loss, net in our consolidated statements of income.

Deferred Compensation Plan

We have an unfunded Deferred Compensation Plan that covers

one

current and certain former executives and provides for voluntary deferral of compensation. This plan has been frozen with

additional participants or benefits permitted. We recognized expense of $

216,

$228,

and

$248

in fiscal

2017,

2016,

and

2015,

respectively, associated with the plan. Our liability under this plan was

$1,916

and

$1,969

as of

November 25, 2017

and

November 26, 2016,

respectively. The non-current portion of this obligation is included in post-employment benefit obligations in our consolidated balance sheets, with the current portion included in accrued compensation and benefits.

Defined Contribution Plan

We have a qualified defined contribution plan (Employee Savings/Retirement Plan) that covers substantially all employees

who elect to participate and have fulfilled the necessary service requirements. Employee contributions to the Plan are matched at the rate of

25%

of up to

of gross pay, regardless of years of service. Expense for employer matching contributions was

$1,068,

$865

and

$662

during fiscal

2017,

2016

and

2015,

respectively. The increase in contribution expense for fiscal

2017

over fiscal

2016

was largely due to a larger contribution base due to increased incentive compensation. The increase in contribution expense for fiscal

2016

over fiscal

2015

was largely due to an increase in the matching rate from

20%

2015

25%

2016.