UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 1, 2019

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________________ to _______________________

Commission File No. 000-00209

BASSETT FURNITURE INDUSTRIES, INCORPORATED

(Exact name of Registrant as specified in its charter)

Virginia	54-0135270
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

3525 Fairystone Park Highway

Bassett, Virginia 24055

(Address of principal executive offices)

(Zip Code)

(276) 629-6000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock ($5.00 par value)	BSET	NASDAQ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes    X     No         

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    X     No         

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	Accelerated Filer	X
Non-accelerated Filer	Smaller Reporting Company
	Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes          No     X     

At June 26, 2019, 10,409,751 shares of common stock of the Registrant were outstanding.

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BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

TABLE OF CONTENTS

ITEM		PAGE
	PART I - FINANCIAL INFORMATION
1.	Condensed Consolidated Financial Statements as of  June 1, 2019 (unaudited) and November 24, 2018 and for the three and six months ended June 1, 2019 (unaudited) and May 26, 2018 (unaudited)
	Condensed Consolidated Statements of Income	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
3.	Quantitative and Qualitative Disclosures About Market Risk	36
4.	Controls and Procedures	36
	PART II - OTHER INFORMATION
1.	Legal Proceedings	38
2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	38
3.	Defaults Upon Senior Securities	38
6.	Exhibits	38

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE PERIODS ENDED JUNE 1, 2019 AND MAY 26, 2018 – UNAUDITED

(In thousands except per share data)

	Quarter Ended						Six Months Ended
	June 1, 2019			May 26, 2018			June 1, 2019			May 26, 2018
Sales revenue:
Furniture and accessories	$	95,824		$	102,675		$	203,181		$	198,798
Logistics		12,366			14,305			25,850			28,454
Total sales revenue		108,190			116,980			229,031			227,252
Cost of furniture and accessories sold		42,530			45,660			91,707			88,929
Selling, general and administrative expenses excluding new store pre-opening costs		64,590			65,456			133,976			129,707
New store pre-opening costs		369			201			863			903
Early retirement program		-			-			835			-
Income from operations		701			5,663			1,650			7,713
Other loss, net		(145	)		(233	)		(268	)		(860	)
Income before income taxes		556			5,430			1,382			6,853
Income tax expense		111			1,141			329			3,477
Net income	$	445		$	4,289		$	1,053		$	3,376
Basic earnings per share	$	0.04		$	0.40		$	0.10		$	0.32
Diluted earnings per share	$	0.04		$	0.40		$	0.10		$	0.31
Dividends per share	$	0.125		$	0.11		$	0.25		$	0.22

The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.

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PART I – FINANCIAL INFORMATION – CONTINUED

ITEM 1. FINANCIAL STATEMENTS

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE PERIODS ENDED JUNE 1, 2019 AND MAY 26, 2018 – UNAUDITED

(In thousands)

	Quarter Ended						Six Months Ended
	June 1, 2019			May 26, 2018			June 1, 2019			May 26, 2018
Net income	$	445		$	4,289		$	1,053		$	3,376
Other comprehensive income:
Amortization associated with Long Term Cash Awards (LTCA)		31			31			62			62
Income taxes related to LTCA		(8	)		(8	)		(16	)		(16	)
Amortization associated with supplemental executive retirement defined benefit plan (SERP)		46			76			92			152
Income taxes related to SERP		(12	)		(19	)		(24	)		(38	)
Other comprehensive income, net of tax		57			80			114			160
Total comprehensive income	$	502		$	4,369		$	1,167		$	3,536

The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.

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PART I – FINANCIAL INFORMATION – CONTINUED

ITEM 1. FINANCIAL STATEMENTS

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 1, 2019AND NOVEMBER 24, 2018

(In thousands)

	(Unaudited)
Assets	June 1, 2019			November 24, 2018
Current assets
Cash and cash equivalents	$	11,581		$	33,468
Short-term investments		22,643			22,643
Accounts receivable, net		20,906			19,055
Inventories		66,715			64,192
Other current assets		14,652			9,189
Total current assets		136,497			148,547
Property and equipment, net		106,089			104,863
Deferred income taxes		3,250			3,266
Goodwill and other intangible assets		28,291			28,480
Other		6,374			6,485
Total long-term assets		37,915			38,231
Total assets	$	280,501		$	291,641
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	19,587		$	27,407
Accrued compensation and benefits		11,299			12,994
Customer deposits		24,910			27,157
Other current liabilites and accrued expenses		11,667			14,261
Total current liabilities		67,463			81,819
Long-term liabilities
Post employment benefit obligations		12,623			13,173
Other long-term liabilities		13,249			6,340
Total long-term liabilities		25,872			19,513
Stockholders’ equity
Common stock		52,262			52,638
Retained earnings		137,127			140,009
Accumulated other comprehensive loss		(2,223	)		(2,338	)
Total stockholders' equity		187,166			190,309
Total liabilities and stockholders’ equity	$	280,501		$	291,641

The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.

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PART I – FINANCIAL INFORMATION – CONTINUED

ITEM 1. FINANCIAL STATEMENTS

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED JUNE 1, 2019 AND MAY 26, 2018 – UNAUDITED

(In thousands)

	Six Months Ended
	June 1, 2019			May 26, 2018
Operating activities:
Net income	$	1,053		$	3,376
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		6,735			6,688
Gain on sale of property and equipment		(3	)		(136	)
Deferred income taxes		23			2,183
Other, net		(276	)		1,243
Changes in operating assets and liabilities:
Accounts receivable		(1,824	)		124
Inventories		(3,355	)		(3,689	)
Other current assets		(3,274	)		(2,311	)
Customer deposits		(2,247	)		(5,014	)
Accounts payable and other liabilities		(5,774	)		(2,185	)
Net cash provided by (used in) operating activities		(8,942	)		279
Investing activities:
Purchases of property and equipment		(8,313	)		(7,662	)
Proceeds from sales of property and equipment		11			2,463
Cash paid for business acquisition		-			(15,556	)
Other		343			(527	)
Net cash used in investing activities		(7,959	)		(21,282	)
Financing activities:
Cash dividends		(2,603	)		(6,124	)
Proceeds from the exercise of stock options		25			27
Other issuance of common stock		159			173
Repurchases of common stock		(2,347	)		(823	)
Taxes paid related to net share settlement of equity awards		-			(522	)
Repayments of notes payable		(220	)		(3,128	)
Net cash used in financing activities		(4,986	)		(10,397	)
Change in cash and cash equivalents		(21,887	)		(31,400	)
Cash and cash equivalents - beginning of period		33,468			53,949
Cash and cash equivalents - end of period	$	11,581		$	22,549

The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

References to “ASC” included hereinafter refer to the Accounting Standards Codification established by the Financial Accounting Standards Board (“FASB”) as the source of authoritative GAAP.

The condensed consolidated financial statements include the accounts of Bassett Furniture Industries, Incorporated (“Bassett”, “we”, “our”, or the “Company”) and our wholly-owned subsidiaries of which we have a controlling interest. In accordance with ASC Topic 810, we have evaluated our licensees and certain other entities to determine whether they are variable interest entities (“VIEs”) of which we are the primary beneficiary and thus would require consolidation in our financial statements. To date we have concluded that none of our licensees nor any other of our counterparties represent VIEs.

Revenue from the sale of furniture and accessories is reported in the accompanying condensed consolidated statements of income net of estimates for returns and allowances.

Revenues from logistical services are generated by our wholly-owned subsidiary, Zenith Freight Lines, LLC (“Zenith”). Sales of logistical services from Zenith to our wholesale and retail segments have been eliminated in consolidation, and Zenith’s operating costs and expenses are included in selling, general and administrative expenses in our condensed consolidated statements of income.

Our fiscal year, which ends on the last Saturday of November, periodically results in a 53-week year instead of the normal 52 weeks. The current fiscal year ending November 30, 2019 is a 53-week year, with the additional week being included in our first fiscal quarter. Accordingly, the information presented below includes 27 weeks of operations for the six months ended June 1, 2019 as compared with 26 weeks included in the six months ended May 26, 2018.

Lane Venture Acquisition

On December 21, 2017, we purchased certain assets and assumed certain liabilities of Lane Venture from Heritage Home Group, LLC. Lane Venture is being operated as a component of our wholesale segment (see Note 3, Business Combinations). Results of operations for the Lane Venture business are included in our condensed consolidated statements of income since the date of acquisition.

Recently Adopted Accounting Pronouncements

Effective as of the beginning of fiscal 2019, we have adopted Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. Among the types of cash flows addressed are payments for costs related to debt prepayments or extinguishments, payments representing accreted interest on discounted debt, payments of contingent consideration after a business combination, proceeds from insurance claims and company-owned life insurance, and distributions from equity method investees, among others. The amendments in ASU 2016-15 are to be adopted retrospectively with comparative amounts in prior period cash flow statements reclassified to conform to the current period presentation. Accordingly, for the six months ended May 26, 2018 we have reclassified investments in Company-owned life insurance of $527 from cash flows from operating activities to cash flows from investing activities, and we have reclassified $78 representing the portion of a debt payment attributable to discount accretion from cash flows from financing activities to cash flows from operating activities.

As of the beginning of fiscal 2019, we also adopted Accounting Standards Update No. 2014-09, Revenue – Revenue from Contracts with Customers (Topic 606 or “ASC 606”). Refer to Note 14, Revenue Recognition, for more information regarding the impact of ASC 606 on our financial statements.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data)

2. Interim Financial Presentation

All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. The results of operations for the three and six months ended June 1, 2019 are not necessarily indicative of results for the full fiscal year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended November 24, 2018.

Income Taxes and Impact of the Tax Cuts and Jobs Act

We calculate an anticipated effective tax rate for the year based on our annual estimates of pretax income and use that effective tax rate to record our year-to-date income tax provision.  Any change in annual projections of pretax income could have a significant impact on our effective tax rate for the respective quarter.

On December 22, 2017, The Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act reduced the federal statutory corporate income tax rate from 35% to 21% effective January 1, 2018 for all corporate taxpayers.  Our effective tax rate for the three and six months ended June 1, 2019 differs from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences, including the recognition of non-taxable proceeds from Company-owned life insurance. 

Because the Act specified the new 21% tax rate beginning on January 1, 2018, we were only subject to the reduced rate for 11 months of 2018.  Therefore, we computed our income tax expense for fiscal 2018 using a blended federal statutory rate of 22.2%.  Our effective tax rates for the three and six months ended May 26, 2018 of 21.3% and 51.4%, respectively, differ from the blended statutory rate primarily due to a discrete charge (benefit) of ($155) and $2,032, respectively, arising from the re-measurement of our deferred tax assets at the lower statutory rate.  Other items impacting our effective tax rate for the three and six months ended May 26, 2018 included the effects of state income taxes and various permanent differences including the favorable impacts of excess tax benefits on stock-based compensation of $16 and $197, respectively, non-taxable life insurance proceeds of $266 during the second quarter of 2018, and the Section 199: Domestic Production Activities Deduction, which was eliminated by the Act for our fiscal 2019 tax return.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data)

3. Business Combinations

Acquisition of Lane Venture

On 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 $15,556 all-cash purchase price to the acquired assets and liabilities of the Lane Venture business, was as follows:

Allocation of the fair value of consideration transferred:
Identifiable assets acquired:
Accounts receivable, net of reserve	$	1,507
Inventory, net of reserve		3,718
Prepaid expenses and other current assets		37
Intangible assets		7,360
Total identifiable assets acquired		12,622
Liabilities assumed:
Accounts payable		(357	)
Other accrued liabilities		(852	)
Total liabilities assumed		(1,209	)
Net identifiable assets acquired		11,413
Goodwill		4,143
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 was 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 2 and Level 3 inputs as specified in the fair value hierarchy in ASC 820, Fair Value Measurements and Disclosures. See Note 4.

Acquisition costs related to the Lane Venture acquisition totaled $26 and $254 during the three and six months ended May 26, 2018, and are included in selling, general and administrative expenses in the condensed consolidated statements of income. The acquisition costs are primarily related to legal, accounting and valuation services.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data)

The pro forma results of operations for the acquisition of Lane Venture have not been presented because they are not material to our consolidated results of operations for the three and six months ended May 26, 2018.

4. Financial Instruments and Fair Value Measurements

Financial Instruments

Our financial instruments include cash and cash equivalents, short-term investments in certificates of deposit, accounts receivable, cost method investments, accounts payable and notes payable. Because of their short maturities, the carrying amounts of cash and cash equivalents, short-term investments in certificates of deposit, accounts receivable, and accounts payable approximate fair value.

Investments

Our short-term investments of $22,643 at June 1, 2019 and November 24, 2018 consisted of certificates of deposit (CDs). At June 1, 2019, the CDs had original terms averaging 11 months, bearing interest at rates ranging from 0.85% to 2.70%. At June 1, 2019, the weighted average remaining time to maturity of the CDs was approximately 2 months and the weighted average yield of the CDs was approximately 2.45%. Each CD is placed with a federally insured financial institution and all deposits are within federal deposit insurance limits. Due to the nature of these investments and their relatively short maturities, the carrying amount of the short-term investments at June 1, 2019 and November 24, 2018 approximates their fair value.

Fair Value Measurement 

The Company accounts for items measured at fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

Level 1 Inputs– Quoted prices for identical instruments in active markets.

Level 2 Inputs– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs– Instruments with primarily unobservable value drivers.

We believe that the carrying amounts of our current assets and current liabilities approximate fair value due to the short-term nature of these items. The recurring estimate of the fair value of our notes payable for disclosure purposes (see Note 8) involves Level 3 inputs. Our primary non-recurring fair value estimates typically involve business acquisitions (Note 3) which involve a combination of Level 2 and Level 3 inputs.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data) 

5. Accounts Receivable

Accounts receivable consists of the following:

	June 1, 2019			November 24, 2018
Gross accounts receivable	$	21,677		$	19,809
Allowance for doubtful accounts		(771	)		(754	)
Accounts receivable, net	$	20,906		$	19,055

Activity in the allowance for doubtful accounts for the six months ended June 1, 2019 was as follows:

Balance at November 24, 2018	$	754
Additions to allowance, net		17
Balance at June 1, 2019	$	771

We believe that the carrying value of our net accounts receivable approximates fair value. 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 4.

6. Inventories

Domestic furniture inventories are valued at the lower of cost, which is determined using the last-in, first-out (LIFO) method, or market. Imported inventories and those applicable to Lane Venture are valued at the lower of cost, which is determined using the first-in, first-out (FIFO) method, or net realizable value.

Inventories were comprised of the following:

	June 1, 2019			November 24, 2018
Wholesale finished goods	$	28,034		$	30,750
Work in process		512			432
Raw materials and supplies		17,090			15,503
Retail merchandise		31,837			27,599
Total inventories on first-in, first-out method		77,473			74,284
LIFO adjustment		(8,456	)		(8,326	)
Reserve for excess and obsolete inventory		(2,302	)		(1,766	)
	$	66,715		$	64,192

We estimate an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand, market conditions and the respective valuations at LIFO. The need for these reserves is primarily driven by the normal product life cycle. As products mature and sales volumes decline, we rationalize our product offerings to respond to consumer tastes and keep our product lines fresh. If actual demand or market conditions in the future are less favorable than those estimated, additional inventory write-downs may be required. In determining reserves, we calculate separate reserves on our wholesale and retail inventories. Our wholesale inventories tend to carry the majority of the reserves for excess quantities and obsolete inventory due to the nature of our distribution model. These wholesale reserves primarily represent design and/or style obsolescence. Typically, product is not shipped to our retail warehouses until a consumer has ordered and paid a deposit for the product. We do not typically hold retail inventory for stock purposes. Consequently, floor sample inventory and inventory for delivery to customers account for the majority of our inventory at retail. Retail reserves are based on accessory and clearance floor sample inventory in our stores and any inventory that is not associated with a specific customer order in our retail warehouses.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data) 

Activity in the reserves for excess quantities and obsolete inventory by segment are as follows:

	Wholesale Segment			Retail Segment			Total
Balance at November 24, 2018	$	1,500		$	266		$	1,766
Additions charged to expense		1,066			208			1,274
Write-offs		(569	)		(169	)		(738	)
Balance at June 1, 2019	$	1,997		$	305		$	2,302

Additions charged to expense for our wholesale segment during the six months ended June 1, 2019 includes a $390 inventory valuation charge arising from our decision to exit the juvenile furniture line of business.

Our estimates and assumptions have been reasonably accurate in the past. We have not made any significant changes to our methodology for determining inventory reserves in 2019 and do not anticipate that our methodology is likely to change in the future.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data) 

7. Goodwill and Other Intangible Assets

Goodwill and other intangible assets consisted of the following:

	June 1, 2019
	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net
Intangibles subject to amortization
Customer relationships	$	3,550	$	(958	)	$	2,592
Technology - customized applications		834		(516	)		318
Total intangible assets subject to amortization		4,384		(1,474	)		2,910
Intangibles not subject to amortization:
Trade names		9,338		-			9,338
Goodwill		16,043		-			16,043
Total goodwill and other intangible assets	$	29,765	$	(1,474	)	$	28,291

	November 24, 2018
	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net
Intangibles subject to amortization
Customer relationships	$	3,550	$	(829	)	$	2,721
Technology - customized applications		834		(456	)		378
Total intangible assets subject to amortization		4,384		(1,285	)		3,099
Intangibles not subject to amortization:
Trade names		9,338		-			9,338
Goodwill		16,043		-			16,043
Total goodwill and other intangible assets	$	29,765	$	(1,285	)	$	28,480

There were noaccumulated impairment losses on goodwill as of June 1, 2019 or November 24, 2018.

The carrying amounts of goodwill by reportable segment at both June 1, 2019 and November 24, 2018 were as follows:

Wholesale	$	9,188
Retail		1,926
Logistical services		4,929
Total goodwill	$	16,043

Amortization expense associated with intangible assets during the three and six months ended June 1, 2019 and May 26, 2018 was as follows:

	Quarter Ended				Six Months Ended
	June 1, 2019		May 26, 2018		June 1, 2019		May 26, 2018
Intangible asset amortization expense	$	95	$	95	$	190	$	185

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data) 

Estimated future amortization expense for intangible assets that exist at June 1, 2019 is as follows:

Remainder of fiscal 2019	$	189
Fiscal 2020		379
Fiscal 2021		379
Fiscal 2022		279
Fiscal 2023		259
Fiscal 2024		259
Thereafter		1,166
Total	$	2,910

8. Notes Payable and Bank Credit Facility

Real Estate Notes Payable

Certain of our retail real estate properties have been financed through commercial mortgages with outstanding principal totaling $72 and $292 at June 1, 2019 and November 24, 2018, respectively. The mortgages each bear interest at a fixed rate of 6.73%. They are collateralized by the respective properties with net book values totaling approximately $5,536 and $5,599 at June 1, 2019 and November 24, 2018, respectively. The entire balance of these mortgages is included in other current liabilities and accrued expenses in the accompanying condensed consolidated balance sheets. These obligations have been paid in full subsequent to June 1, 2019.

Fair Value

We believe that the carrying amount of our notes payable approximates fair value at both June 1, 2019 and November 24, 2018. In estimating the fair value, we utilize current market interest rates for similar instruments. The inputs into these fair value calculations 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 4.

Bank Credit Facility

Our credit facility with our bank provides for a line of credit of up to $25,000. This credit facility is unsecured and contains covenants requiring us to maintain certain key financial ratios. We are in compliance with all covenants under the agreement and expect to remain in compliance for the foreseeable future. The credit facility will mature in December 2021.

At June 1, 2019, we had $2,798 outstanding under standby letters of credit against our line, leaving availability under our credit line of $22,202. In addition, we have outstanding standby letters of credit with another bank totaling $325.

9. Post Employment Benefit Obligations

Defined Benefit Plans

We have an unfunded Supplemental Retirement Income Plan (the “Supplemental Plan”) that covers one current and certain former executives. The liability for the Supplemental Plan was $10,038 and $10,574 as of June 1, 2019 and November 24, 2018, respectively.

We also have the Bassett Furniture Industries, Incorporated Management Savings Plan (the “Management Savings Plan”) which was established in the second quarter of fiscal 2017. The Management Savings Plan is an unfunded, nonqualified deferred compensation plan maintained for the benefit of certain highly compensated or management level employees. As part of the Management Savings Plan, we have made Long Term Cash Awards (“LTC Awards”) totaling $2,000 to certain management employees in the amount of $400 each. The liability for the LTC Awards was $1,124 and $1,078 as of June 1, 2019 and November 24, 2018, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data) 

The combined pension liability for the Supplemental Plan and LTC Awards is recorded as follows in the condensed consolidated balance sheets:

	June 1, 2019		November 24, 2018
Accrued compensation and benefits	$	798	$	798
Post employment benefit obligations		10,364		10,854
Total pension liability	$	11,162	$	11,652

Components of net periodic pension costs for our defined benefit plans for the three and six months ended June 1, 2019 and May 26, 2018 are as follows:

	Quarter Ended				Six Months Ended
	June 1, 2019		May 26, 2018		June 1, 2019		May 26, 2018
Service cost	$	47	$	49	$	94	$	98
Interest cost		110		105		221		210
Amortization of prior service costs		31		31		63		62
Amortization of transition obligation		-		11		-		22
Amortization of loss		46		65		92		130
Net periodic pension cost	$	234	$	261	$	470	$	522

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

Deferred Compensation Plans

We have an unfunded deferred compensation plan that covers one current executive and certain former executives and provides for voluntary deferral of compensation. This plan has been frozen with no additional participants or deferrals permitted. Our liability under this plan was $1,798 and $1,837 as of March 2, 2019 and November 24, 2018, respectively.

We also have an unfunded, nonqualified deferred compensation plan maintained for the benefit of certain highly compensated or management level employees which was established under the Management Savings Plan. Our liability under this plan, including both accrued Company contributions and participant salary deferrals, was $726 and $611 as of June 1, 2019 and November 24, 2018, respectively.

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JUNE 1, 2019
(Dollars in thousands except share and per share data) 

Our combined liability for all deferred compensation arrangements, including Company contributions and participant deferrals under the Management Savings Plan, is recorded as follows in the condensed consolidated balance sheets:

	June 1, 2019		November 24, 2018
Accrued compensation and benefits	$	266	$	266
Post employment benefit obligations		2,258		2,053
Total deferred compensation liability	$	2,524	$	2,319

We recognized expense under our deferred compensation arrangements during the three and six months ended June 1, 2019 and May 26, 2018 as follows:

	Quarter Ended				Six Months Ended
	June 1, 2019		May 26, 2018		June 1, 2019		May 26, 2018
Deferred compensation expense	$	84	$	80	$	183	$	159

10. Other Operating Gains and Losses

Fiscal 2019

Early Retirement Program

During the first quarter of fiscal 2019, we offered a voluntary early retirement package to certain eligible employees of the Company. Twenty-three employees accepted the offer, which expired on February 28, 2019. These employees are to receive pay equal to one-half their current salary plus benefits over a period of 1 year from the final day of each individual’s active employment. Accordingly, we recognized a charge of $835 during the six months ended June 1, 2019. The unpaid obligation of $733 is included in other current liabilities and accrued expenses in our condensed consolidated balance sheet as of June 1, 2019.

Fiscal 2018

Sale of Retail Location

In May 2018 we sold the land and building occupied by our Spring, Texas retail store in connection with the eventual relocation of the store to another site in the Houston market. We received net cash proceeds of $2,463 from the sale, resulting in a gain of $165 recognized during the three and six months ended May 26, 2018 which is included in income from operations in our accompanying condensed consolidated statements of income.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data) 

11. Commitments and Contingencies

We are involved in various legal and environmental matters, which arise in the normal course of business. Although the final outcome of these matters cannot be determined, based on the facts presently known, we believe that the final resolution of these matters will not have a material adverse effect on our financial position or future results of operations.

We lease land and buildings that are used in the operation of our Company-owned retail stores as well as in the operation of certain of our licensee-owned stores, and we lease land and buildings at various locations throughout the continental United States for warehousing and distribution hubs used in our retail and logistical services segments. We also lease tractors and trailers used in our logistical services segment, and local delivery trucks used in our retail segment. Our real estate lease terms range from 1 to 15 years and generally have renewal options of between 5 and 15 years. Some store leases contain contingent rental provisions based upon sales volume. Our transportation equipment leases have terms ranging from 2 to 7 years with fixed monthly rental payments plus variable charges based upon mileage. The following schedule shows future minimum lease payments under non-cancellable operating leases with terms in excess of one year as of June 1, 2019:

	Retail Stores		Warehousing & Distribution Centers		Transportation Equipment		All Other		Total
Remainder of fiscal 2019	$	12,308	$	2,893	$	2,240	$	870	$	18,311
Fiscal 2020		24,078		5,440		4,230		1,637		35,385
Fiscal 2021		21,501		4,835		3,060		970		30,366
Fiscal 2022		19,002		4,586		2,151		487		26,226
Fiscal 2023		16,808		3,182		1,263		-		21,253
Fiscal 2024		12,957		1,291		958		-		15,206
Thereafter		39,919		676		354		-		40,949
Total future minimum lease payments	$	146,573	$	22,903	$	14,256	$	3,964	$	187,696

Improvement allowances received from lessors at the inception of a lease are deferred and amortized over the term of the lease. The unamortized balance of such amounts was $8,277 and $6,716 at June 1, 2019 and November 24, 2018, respectively, with the non-current portion of $7,060 and $5,715, respectively, included in other long term liabilities in our condensed consolidated balance sheets and the remaining current portion included in other current liabilities and accrued expenses. At June 1, 2019 and November 24, 2018 prepaid rent of $3,213 and $245, respectively, was included in other current assets in our condensed consolidated balance sheets.

We also have guaranteed certain lease obligations of licensee operators. Lease guarantees range from 1 to 10 years. We were contingently liable under licensee lease obligation guarantees in the amount of $1,886 and $2,021 at June 1, 2019 and November 24, 2018, respectively.

In the event of default by an independent dealer under the guaranteed lease, we believe that the risk of loss is mitigated through a combination of options that include, but are not limited to, arranging for a replacement dealer or liquidating the collateral (primarily inventory). The proceeds of the above options are expected to cover the estimated amount of our future payments under the guarantee obligations, net of recorded reserves. The fair value of lease guarantees (an estimate of the cost to the Company to perform on these guarantees) at June 1, 2019 and November 24, 2018 was not material.

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PART I-FINANCIAL INFORMATION-CONTINUED
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data) 

12. Earnings Per Share

The following reconciles basic and diluted earnings per share:

	Net Income		Weighted Average Shares		Net Income Per Share
For the quarter ended June 1, 2019:
Basic earnings per share	$	445		10,433,492	$	0.04
Add effect of dilutive securities:
Options and restricted shares		-		26,329		-
Diluted earnings per share	$	445		10,459,821	$	0.04
For the quarter ended May 26, 2018:
Basic earnings per share	$	4,289		10,701,154	$	0.40
Add effect of dilutive securities:
Options and restricted shares		-		40,182		-
Diluted earnings per share	$	4,289		10,741,336	$	0.40
For the six months ended June 1, 2019:
Basic earnings per share	$	1,053		10,444,306	$	0.10
Add effect of dilutive securities:
Options and restricted shares		-		27,530		-
Diluted earnings per share	$	1,053		10,471,836	$	0.10
For the six months ended May 26, 2018:
Basic earnings per share	$	3,376		10,693,815	$	0.32
Add effect of dilutive securities:
Options and restricted shares		-		53,936		(0.01	)
Diluted earnings per share	$	3,376		10,747,751	$	0.31

For the three and six months ended June 1, 2019 and May 26, 2018, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive:

	Quarter Ended				Six Months Ended
	June 1, 2019		May 26, 2018		June 1, 2019		May 26, 2018
Unvested shares		45,653		5,292		45,653		5,292

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JUNE 1, 2019
(Dollars in thousands except share and per share data) 

13. 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 3, 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 income.

● Retail – Company-owned stores. 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 income. 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 $19,841 and $40,880 for the three and six months ended June 1, 2019, and $20,940 and $42,032 for the three and six months ended May 26, 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 no 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data) 

The following table presents our segment information:

	Quarter Ended						Six Months Ended
	June 1, 2019			May 26, 2018			June 1, 2019			May 26, 2018
Sales Revenue
Wholesale	$	63,131		$	63,788		$	135,912		$	126,888
Retail - Company-owned stores		62,568			68,682			132,197			133,343
Logistical services		20,093			21,229			41,844			42,651
Inter-company eliminations:
Furniture and accessories		(29,875	)		(29,795	)		(64,929	)		(61,433	)
Logistical services		(7,727	)		(6,924	)		(15,993	)		(14,197	)
Consolidated	$	108,190		$	116,980		$	229,031		$	227,252
Income from Operations
Wholesale	$	3,173		$	3,039		$	7,355		$	6,103
Retail - Company-owned stores		(2,953	)		1,626			(5,999	)		113
Logistical services		252			289			964			619
Inter-company elimination		229			709			165			878
Early retirement program		-			-			(835	)		-
Consolidated	$	701		$	5,663		$	1,650		$	7,713
Depreciation and Amortization
Wholesale	$	827		$	757		$	1,645		$	1,460
Retail - Company-owned stores		1,544			1,603			3,049			3,201
Logistical services		994			1,024			2,041			2,027
Consolidated	$	3,365		$	3,384		$	6,735		$	6,688
Capital Expenditures
Wholesale	$	1,075		$	1,113		$	2,140		$	2,330
Retail - Company-owned stores		1,373			1,861			5,390			4,478
Logistical services		313			730			783			854
Consolidated	$	2,761		$	3,704		$	8,313		$	7,662

	As of		As of
Identifiable Assets	June 1, 2019		November 24, 2018
Wholesale	$	133,828	$	144,209
Retail - Company-owned stores		101,658		96,241
Logistical services		45,015		51,191
Consolidated	$	280,501	$	291,641

Wholesale shipments by type

	Quarter Ended								Six Months Ended
	June 1, 2019				May 26, 2018				June 1, 2019				May 26, 2018
Bassett Custom Upholstery	$	36,853	58.4	%	$	36,506	57.2	%	$	78,391	57.7	%	$	70,074	55.2	%
Bassett Leather		4,463	7.1	%		5,082	8.0	%		10,234	7.5	%		11,606	9.1	%
Bassett Custom Wood		10,526	16.7	%		11,184	17.5	%		22,201	16.3	%		22,171	17.5	%
Bassett Casegoods		9,979	15.8	%		9,948	15.6	%		22,619	16.6	%		20,745	16.3	%
Accessories		1,310	2.1	%		1,068	1.7	%		2,467	1.8	%		2,292	1.8	%
Total	$	63,131	100.0	%	$	63,788	100.0	%	$	135,912	100.0	%	$	126,888	100.0	%

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JUNE 1, 2019
(Dollars in thousands except share and per share data) 

14. Revenue Recognition

We adopted ASU 2014-09, Revenue - Revenue from Contracts with Customers (ASC Topic 606 or "ASC 606") effective as of November 25, 2018, the beginning of our 2019 fiscal year. ASC 606 requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. For our wholesale and retail segments, revenue is recognized when the risks and rewards of ownership and title to the product have transferred to the buyer.

At wholesale, transfer occurs and revenue is recognized upon the shipment of goods to independent dealers and licensee-owned BHF stores. We offer payment terms varying from 30 to 60 days for wholesale customers. Estimates for returns and allowances have been recorded as a reduction of revenue based on our historical return patterns. The contracts with our licensee store owners do not provide for any royalty or license fee to be paid to us.

At retail, transfer occurs and revenue is recognized upon delivery of goods to the customer. We typically collect a significant portion of the purchase price as a customer deposit upon order, with the balance typically collected upon delivery. These deposits are carried on our balance sheet as a current liability until delivery is fulfilled and amounted to $24,910 and $27,157 as of June 1, 2019 and November 24, 2018, respectively. Substantially all of the customer deposits held at November 24, 2018 related to performance obligations satisfied during the current period and have therefore been recognized in revenue for the six months ended June 1, 2019. Estimates for returns and allowances have been recorded as a reduction of revenue based on our historical return patterns. We also sell furniture protection plans to our retail customers on behalf of a third party which is responsible for the performance obligations under the plans. Revenue from the sale of these plans is recognized upon delivery of the goods net of amounts payable to the third party service provider.

For our logistical services segment, line-haul freight revenue is recognized as services are performed and are billed to the customer upon the completion of delivery to the destination. Because the customer receives the benefits of these services as the freight is in transit from point of origin to destination, we recognize revenue using a percentage of completion method based on our estimate the amount of time freight has been in transit as of the reporting date compared with our estimate total required time for the deliveries. We recognize an asset for the amount of line-haul revenue earned but not yet billed which is included in other current assets. The balance of this asset was $472 at June 1, 2019 and $512 at the beginning of the first quarter of fiscal 2019. Warehousing services revenue is based upon warehouse space occupied by a customer’s goods and inventory movements in and out of a warehouse and is recognized as such services are provided and billed to the customer concurrently in the same period. All invoices for logistical services are due 30 days from invoice date.

Sales commissions are expensed as part of selling, general and administrative expenses at the time revenue is recognized because the amortization period would have been one year or less. Sales commissions at wholesale are accrued upon the shipment of goods. Sales commissions at retail are accrued at the time a sale is written (i.e. – when the customer’s order is placed) and are carried as prepaid commissions in other current assets until the goods are delivered and revenue is recognized. At June 1, 2019 and November 24, 2018, our balance of prepaid commissions included in other current assets was $2,418 and $2,739, respectively. We do not incur sales commissions in our logistical services segment.

We adopted ASC 606 using the modified retrospective method and applied the standard only to contracts that were not completed as of initial application. Results for reporting periods beginning after November 24, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. Our adoption of ASC 606 did not have a material impact on our consolidated financial statements except for our enhanced presentation and disclosures. We also expect the impact of the adoption of ASC 606 to be immaterial to our net income and financial position on an ongoing basis.

Upon adoption of ASC 606, we have adopted the following policy elections and practical expedients:

● We exclude from revenue amounts collected from customers for sales tax, which is consistent with our policy prior to the adoption of ASC 606.

● We do not adjust the promised amount of consideration for the effects of a significant financing component since the period of time between transfer of our goods or services and the collection of consideration from the customer is less than 1 year.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
JUNE 1, 2019
(Dollars in thousands except share and per share data) 

● We do not disclose the value of unsatisfied performance obligations because the transfer of goods or services is made within 1 year of the placement of customer orders.

See Note 13, Segment Information, for disaggregated revenue information.

15. Changes to Stockholders’ Equity

The following changes in our stockholders’ equity occurred during the three and six months ended June 1, 2019 and May 26, 2018:

	Quarter Ended						Six Months Ended
	June 1, 2019			May 26, 2018			June 1, 2019			May 26, 2018
Common Stock:
Beginning of period	$	52,598		$	53,776		$	52,638		$	53,690
Issuance of common stock		64			61			281			254
Purchase and retirement of common stock		(400	)		(101	)		(657	)		(208	)
End of period	$	52,262		$	53,736		$	52,262		$	53,736
Common Shares Issued and Outstanding:
Beginning of period		10,519,640			10,755,291			10,527,636			10,737,950
Issuance of common stock		12,729			12,165			56,201			50,806
Purchase and retirement of common stock		(80,024	)		(20,334	)		(131,492	)		(41,634	)
End of period		10,452,345			10,747,122			10,452,345			10,747,122
Additional Paid-in Capital:
Beginning of period	$	-		$	499		$	-		$	962
Issuance of common stock		21			56			(97	)		(53	)
Purchase and retirement of common stock		(242	)		(477	)		(379	)		(1,136	)
Stock based compensation		221			304			476			609
End of period	$	-		$	382		$	-		$	382
Retained Earnings:
Beginning of period	$	138,687		$	137,827		$	140,009		$	139,378
Cumulative effect of a change in accounting principal		-			-			(21	)		-
Reclassification of certain tax effects from accumulated other comprehensive loss		-			-			-			545
Net income for the period		445			4,289			1,053			3,376
Purchase and retirement of common stock		(693	)		-			(1,311	)		-
Cash dividends		(1,312	)		(1,182	)		(2,603	)		(2,365	)
End of period	$	137,127		$	140,934		$	137,127		$	140,934