Business Combination

Acquisition of Lane Venture

December 21, 2017,

we purchased certain assets and assumed certain liabilities of Lane Venture from Heritage Home Group, LLC for

$15,556

in cash. Lane Venture is a manufacturer and distributor of premium outdoor furniture, and is now being operated as a component of our wholesale segment.

Under the acquisition method of accounting, the fair value of the consideration transferred was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date with the remaining unallocated amount recorded as goodwill.

The allocation of the fair value of the acquired business was based on a preliminary valuation. Our estimates and assumptions are subject to change as we obtain additional information for our estimates during the measurement period (up to

one

year from the acquisition date). The primary areas of the preliminary allocation of the fair value of consideration transferred that are

not

yet finalized relate to the fair values of certain tangible and intangible assets acquired and the residual goodwill. During the

nine

months ended

August 25, 2018,

we recorded measurement period adjustments to increase (decrease) the opening value of net accounts receivable, inventory and accrued liabilities by

$150,

(

) and

$38,

respectively, resulting in a reduction of recognized goodwill of

$110.

The preliminary allocation of the

$15,556

all-cash purchase price to the acquired assets and liabilities of the Lane Venture business, including measurement period adjustments, is as follows:

Allocation of the fair value of consideration transferred:
Identifiable assets acquired:
Accounts receivable, net of reserve (Note 5)	$	1,507
Inventory, net of reserve (Note 6)		3,752
Prepaid expenses and other current assets		37
Intangible assets		7,360
Total identifiable assets acquired		12,656
Liabilities assumed:
Accounts payable		(357	)
Other accrued liabilities		(852	)
Total liabilities assumed		(1,209	)
Net identifiable assets acquired		11,447
Goodwill		4,109
Total net assets acquired	$	15,556

Goodwill was determined based on the residual difference between the fair value of the consideration transferred and the value assigned to the tangible and intangible assets and liabilities recognized in connection with the acquisition and is deductible for tax purposes. Among the factors that contributed to a purchase price resulting in the recognition of goodwill are the expected synergies arising from combining the Company’s manufacturing and distribution capabilities with Lane Venture’s position in the outdoor furnishings market, a segment of the market

not

previously served by Bassett.

A portion of the fair value of the consideration transferred has been provisionally assigned to identifiable intangible assets as follows:

	Useful Life
Description:	In Years		Fair Value

Trade name		Indefinite	$	6,848
Customer relationships		9		512

Total acquired intangible assets			$	7,360

The finite-lived intangible asset is being amortized on a straight-line basis over its estimated useful life. The indefinite-lived intangible asset and goodwill are

not

amortized but will be tested for impairment annually or between annual tests if an indicator of impairment exists.

The fair values of consideration transferred and net assets acquired were determined using a combination of Level

and Level

inputs as specified in the fair value hierarchy in ASC

820,

Fair Value Measurements and Disclosures

. See Note

Acquisition costs related to the Lane Venture acquisition totaled

$256

during the

nine

months ended

August 25, 2018,

and are included in selling, general and administrative expenses in the condensed consolidated statements of income. Additional acquisition costs related to Lane Venture are

not

expected to be significant during the remainder of fiscal

2018.

The acquisition costs are primarily related to legal, accounting and valuation services.

The pro forma impact of the acquisition and the results of operations attributable to Lane Venture since the acquisition have

not

been presented because they are

not

material to our consolidated results of operations for the

three

and

nine

month periods ended

August 25, 2018

and

August 26, 2017.

Retail Store Acquisition

During the quarter ended

February 25, 2017,

we acquired the operations of the Bassett Home Furnishings (“BHF”) store located in Columbus, Ohio for a purchase price of

$655.

The store had been owned and operated by a licensee that had determined that continued ownership of a BHF store was

longer consistent with its future business objectives. We believe that Columbus, Ohio represents a viable market for a BHF store.

The purchase price was allocated as follows:

Inventory	$	343
Goodwill		312

Purchase price	$	655

The inputs into our valuation of the acquired assets reflect our market assumptions and are

not

observable. Consequently, the inputs are considered to be Level

inputs as specified in the fair value hierarchy in ASC

820,

Fair Value Measurements and Disclosures

. See Note

The pro forma impact of the acquisition and the results of operations for the Columbus store since acquisition were

not

material to our consolidated results of operations for the

three

and

nine

months ended

August 26, 2017.