Segment Information

We have strategically aligned our business into

three

reportable segments as defined in ASC

280,

Segment Reporting

, and as described below:

●

Wholesale.

The wholesale home furnishings segment is involved principally in the design, manufacture, sourcing, sale and distribution of furniture products to a network of Bassett stores (Company-owned and licensee-owned retail stores) and independent furniture retailers. Our wholesale segment includes our wood and upholstery operations, which now include Lane Venture (see Note

Business Combinations), as well as all corporate selling, general and administrative expenses, including those corporate expenses related to both Company- and licensee-owned stores. Our wholesale segment also includes our holdings of short-term investments and retail real estate previously leased as licensee stores. The earnings and costs associated with these assets are included in other loss, net, in our condensed consolidated statements of operations.

●

Retail – Company-owned

tores.

Our retail segment consists of Company-owned stores and includes the revenues, expenses, assets and liabilities and capital expenditures directly related to these stores and the Company-owned distribution network utilized to deliver products to our retail customers.

●

Logistical services

Our logistical services segment reflects the operations of Zenith. In addition to providing shipping and warehousing services for the Company, Zenith also provides similar services to other customers, primarily in the furniture industry. Revenue from the performance of these services to other customers is included in logistical services revenue in our condensed consolidated statements of operations. Zenith’s total operating costs, including those associated with providing logistical services to the Company as well as to

third

-party customers, are included in selling, general and administrative expenses and were

$21,039

and

$21,092

for the

three

months ended

March 2, 2019

and

February 24, 2018,

respectively.

During the

fourth

quarter of fiscal

2018,

we substantially completed transferring operational control of home delivery services for BHF stores from Zenith to our retail segment, including the transfer of the assets and many of the employees used in providing that service. Accordingly, the results for the retail and logistical services segments for all periods presented have been restated to present the depreciation and amortization, capital expenditures and identifiable assets associated with home delivery services formerly provided by Zenith to the Bassett retail segment as though they had been incurred within the retail segment, and intercompany revenues for those services are

longer included in the logistical services segment. The impact of the restatement upon the income (loss) from operations for both the logistical services and retail segments was

not

material. Concurrently with the transfer of home delivery operations to retail, Zenith also ceased providing such services to

third

party customers. Revenues from Zenith’s home delivery services formerly provided to

third

party customers and the associated costs thereof continue to be reported in the logistical services segment. Zenith continues to provide other intercompany shipping and warehousing services to Bassett which are eliminated in consolidation.

Inter-company net sales elimination represents the elimination of wholesale sales to our Company-owned stores and the elimination of Zenith logistics revenue from our wholesale and retail segments. Inter-company income elimination includes the embedded wholesale profit in the Company-owned store inventory that has

not

been realized. These profits will be recorded when merchandise is delivered to the retail consumer. The inter-company income elimination also includes rent paid by our retail stores occupying Company-owned real estate, and the elimination of shipping and handling charges from Zenith for services provided to our wholesale and retail operations.

The following table presents our segment information:

	Quarter Ended
	March 2, 2019			February 24, 2018
Sales Revenue
Wholesale	$	72,781		$	63,100
Retail - Company-owned stores		69,629			64,661
Logistical services		21,751			21,422
Inter-company eliminations:
Furniture and accessories		(35,054	)		(31,638	)
Logistical services		(8,266	)		(7,273	)
Consolidated	$	120,841		$	110,272

Income from Operations
Wholesale	$	4,182		$	3,064
Retail - Company-owned stores		(3,046	)		(1,513	)
Logistical services		712			330
Inter-company elimination		(64	)		169
Early retirement program		(835	)		-
Consolidated	$	949		$	2,050

Depreciation and Amortization
Wholesale	$	818		$	703
Retail - Company-owned stores		1,505			1,598
Logistical services		1,047			1,003
Consolidated	$	3,370		$	3,304

Capital Expenditures
Wholesale	$	1,065		$	1,217
Retail - Company-owned stores		4,017			2,617
Logistical services		470			124
Consolidated	$	5,552		$	3,958

	As of		As of
Identifiable Assets	March 2, 2019		November 24, 2018
Wholesale	$	133,214	$	144,209
Retail - Company-owned stores		102,662		96,241
Logistical services		46,159		51,191
Consolidated	$	282,035	$	291,641

Wholesale shipments by type
	Quarter Ended
	March 2, 2019				February 24, 2018

Bassett Custom Upholstery	$	41,538	57.1	%	$	33,568	53.2	%
Bassett Leather		5,771	7.9	%		6,524	10.3	%
Bassett Custom Wood		11,675	16.0	%		10,987	17.4	%
Bassett Casegoods		12,640	17.4	%		10,797	17.1	%
Accessories		1,157	1.6	%		1,224	1.9	%
Total	$	72,781	100.0	%	$	63,100	100.0	%