UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 29, 2020

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 ☒ 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 ☒  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	☒
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 ☒

At September 25, 2020, 9,976,513 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 August 29, 2020 (unaudited) and November 30, 2019 and for the three and nine months ended August 29, 2020 (unaudited) and August 31, 2019 (unaudited)
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Comprehensive Income (Loss)	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		25
3.	Quantitative and Qualitative Disclosures About Market Risk		36
4.	Controls and Procedures		37
PART II - OTHER INFORMATION
1.	Legal Proceedings		38
1A.	Risk Factors		38
2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities		38
3.	Defaults Upon Senior Securities		39
6.	Exhibits		39

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE PERIODS ENDED AUGUST 29, 2020 AND AUGUST 31, 2019 – UNAUDITED

(In thousands except per share data)

	Quarter Ended					Nine Months Ended
	August 29, 2020		August 31, 2019			August 29, 2020			August 31, 2019
Sales revenue:
Furniture and accessories	$	80,341	$	98,369		$	232,283		$	301,550
Logistics		11,218		11,050			35,197			36,900
Total sales revenue		91,559		109,419			267,480			338,450
Cost of furniture and accessories sold		38,418		42,246			113,140			133,953
Selling, general and administrative expenses excluding new store pre-opening costs		50,394		63,519			165,407			197,495
New store pre-opening costs		-		254			-			1,117
Asset impairment charges		-		-			12,184			-
Goodwill impairment charge		-		-			1,971			-
Litigation expense		-		-			1,050			-
Early retirement program		-		-			-			835
Income (loss) from operations		2,747		3,400			(26,272	)		5,050
Other income (loss), net		697		(298	)		(430	)		(566	)
Income (loss) before income taxes		3,444		3,102			(26,702	)		4,484
Income tax expense (benefit)		1,266		945			(9,738	)		1,274
Net income (loss)	$	2,178	$	2,157		$	(16,964	)	$	3,210
Basic earnings (loss) per share	$	0.22	$	0.21		$	(1.70	)	$	0.31
Diluted earnings (loss) per share	$	0.22	$	0.21		$	(1.70	)	$	0.31
Dividends per share	$	0.08	$	0.125		$	0.33		$	0.375

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 (LOSS)

FOR THE PERIODS ENDED AUGUST 29, 2020 AND AUGUST 31, 2019 – UNAUDITED

(In thousands)

	Quarter Ended						Nine Months Ended
	August 29, 2020			August 31, 2019			August 29, 2020			August 31, 2019
Net income (loss)	$	2,178		$	2,157		$	(16,964	)	$	3,210
Other comprehensive income:
Amortization associated with
Long Term Cash Awards (LTCA)		31			31			94			93
Income taxes related to LTCA		(8	)		(8	)		(24	)		(24	)
Amortization associated with supplemental executive retirement defined benefit plan (SERP)		2			47			5			139
Income taxes related to SERP		-			(12	)		(1	)		(36	)
Other comprehensive income, net of tax		25			58			74			172
Total comprehensive income (loss)	$	2,203		$	2,215		$	(16,890	)	$	3,382

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

AUGUST 29, 2020AND NOVEMBER 30, 2019

(In thousands)

	(Unaudited)
	August 29, 2020			November 30, 2019
Assets
Current assets
Cash and cash equivalents	$	31,029		$	19,687
Short-term investments		17,661			17,436
Accounts receivable, net		19,099			21,378
Inventories		58,601			66,302
Recoverable income taxes		10,048			329
Other current assets		9,480			11,654
Total current assets		145,918			136,786
Property and equipment, net		89,031			101,724
Deferred income taxes		7,729			5,744
Goodwill and other intangible assets		23,921			26,176
Right of use assets under operating leases		120,889			-
Other		6,828			5,336
Total long-term assets		159,367			37,256
Total assets	$	394,316		$	275,766
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	19,215		$	23,677
Accrued compensation and benefits		14,463			11,308
Customer deposits		35,721			25,341
Current portion operating lease obligations		28,211			-
Other current liabilites and accrued expenses		12,874			11,945
Total current liabilities		110,484			72,271
Long-term liabilities
Post employment benefit obligations		12,023			11,830
Long-term portion of operating lease obligations		117,009			-
Other long-term liabilities		1,336			12,995
Total long-term liabilities		130,368			24,825
Stockholders’ equity
Common stock		49,883			50,581
Retained earnings		104,743			129,130
Additional paid-in capital		-			195
Accumulated other comprehensive loss		(1,162	)		(1,236	)
Total stockholders' equity		153,464			178,670
Total liabilities and stockholders’ equity	$	394,316		$	275,766

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 AUGUST 29, 2020 AND AUGUST 31, 2019 – UNAUDITED

(In thousands)

	Nine Months Ended
	August 29, 2020			August 31, 2019
Operating activities:
Net income (loss)	$	(16,964	)	$	3,210
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		10,249			10,092
Gain on lease modification		(152	)		-
(Gain) loss on sale of property and equipment		39			(98	)
Asset impairment charges		12,184			-
Goodwill impairment charge		1,971			-
Inventory valuation charges		3,814			1,753
Bad debt valuation charges (recoveries)		727			(5	)
Deferred income taxes		(708	)		22
Other, net		149			161
Changes in operating assets and liabilities:
Accounts receivable		1,552			(1,755	)
Inventories		3,887			(3,858	)
Other current assets		(8,898	)		(1,986	)
Right of use assets under operating leases		24,338			-
Customer deposits		10,380			(4,673	)
Accounts payable and other liabilities		1,379			(4,922	)
Obligations under operating leases		(26,464	)		-
Net cash provided by (used in) operating activities		17,483			(2,059	)
Investing activities:
Purchases of property and equipment		(2,214	)		(10,651	)
Proceeds from sales of property and equipment		2,345			119
Purchases of investments		(241	)		-
Proceeds from maturities of investments		16			5,000
Other		(1,107	)		(506	)
Net cash used in investing activities		(1,201	)		(6,038	)
Financing activities:
Cash dividends		(3,306	)		(3,867	)
Proceeds from the exercise of stock options		-			25
Other issuance of common stock		217			246
Repurchases of common stock		(1,542	)		(6,845	)
Taxes paid related to net share settlement of equity awards		(214	)		-
Repayments of finance lease obligations		(95	)		-
Repayments of notes payable		-			(292	)
Net cash used in financing activities		(4,940	)		(10,733	)
Change in cash and cash equivalents		11,342			(18,830	)
Cash and cash equivalents - beginning of period		19,687			33,468
Cash and cash equivalents - end of period	$	31,029		$	14,638

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
AUGUST 29, 2020
(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 operations 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 operations.

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 prior fiscal year ending November 30, 2019 was a 53-week year, with the additional week being included in the first fiscal quarter of 2019. Accordingly, the information presented below includes 39 weeks of operations for the nine months ended August 29, 2020 as compared with 40 weeks included in the nine months ended August 31, 2019.

Recently Adopted Accounting Pronouncements

Effective as of the beginning of fiscal 2020, we have adopted Accounting Standards Update No. 2016-02, Leases (Topic 842). The guidance in ASU 2016-02 (as subsequently amended by ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20) requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. We have adopted this standard using the modified retrospective approach. Refer to Note 11, Leases, for more information regarding our leases and the adoption of the new standard.

Impact of the COVID-19 Pandemic Upon our Financial Condition and Results of Operations

On March 11, 2020, the World Health Organization declared the current coronavirus (“COVID-19”) outbreak to be a global pandemic. In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. These measures have had a significant adverse impact upon many sectors of the economy, including non-essential retail commerce.

In response to these measures and for the protection of our employees and customers, we temporarily closed our dedicated stores, our manufacturing locations and many of our warehouses for several weeks primarily during the second fiscal quarter of 2020. This extended period of suspended operations has had a material adverse impact upon our results of operations for the nine months ended August 29, 2020. In addition to operating losses resulting from severely reduced sales volumes, our loss for the nine months ended August 29, 2020 also included charges for goodwill impairment (Note 6) as well as for the impairment of certain other long-lived assets (Note 9) taken during the second quarter of 2020. However, since restarting our manufacturing operations and reopening stores, we have seen a significant improvement in business conditions which has allowed us to return to overall profitability for the third fiscal quarter of 2020 and to generate positive cash flow during the period. All retail stores that were temporarily closed during the second quarter had reopened by mid- June, and written orders taken at both the retail and wholesale segments exceeded levels from the third fiscal quarter of 2019. The improvement in operating cash flow allowed us to restore the temporary salary and wage reductions which had been enacted during the second quarter, resume the payment of quarterly dividends, including the payment of the dividend declared and subsequently suspended during the second quarter, and to resume share repurchases under our share repurchase program. Tempering these improvements are the continuing logistical challenges faced by the entire home furnishings industry resulting from COVID-related labor shortages and supply chain disruptions creating significant delays in order fulfillment and increasing backlogs. 

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
AUGUST 29, 2020
(Dollars in thousands except share and per share data)

Whereas most state and local governments have eased restrictions on commercial retail activity, it is possible that a resurgence in COVID-19 cases could prompt a return to tighter restrictions in certain areas of the country. Furthermore, while the home furnishings industry has fared much better during the pandemic than certain other sectors of the economy, continued economic weakness may eventually have an adverse impact upon our business, and order cancellations could result if the present delays in order fulfillment continue for an extended period of time. Therefore, significant uncertainty remains regarding the ongoing impact of the COVID-19 outbreak upon our financial condition and future results of operations, as well as upon the significant estimates and assumptions we utilize in reporting certain assets and liabilities.

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 nine months ended August 29, 2020 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 30, 2019.

Income Taxes

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 March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. A major provision of the CARES Act allows net operating losses from the 2018, 2019 and 2020 tax years to be carried back up to five years. As a result, our effective tax rates for the three and nine months ended August 29, 2020 were 36.8% and (36.5%), respectively, which differ from the federal statutory rate of 21% primarily due to the effects of carrying back our current net operating loss to tax years in which the federal statutory rate was 35%, and to the effects of state income taxes and various permanent differences, including those related to the non-taxability of Company-owned life insurance. Our effective tax rates for the three and nine months ended August 31, 2019 were 30.5% and 28.4%, respectively, and differ from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences, including those related to the non-taxability of Company-owned life insurance.

3. Financial Instruments and Fair Value Measurements

Financial Instruments

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

Investments

Our short-term investments of $17,661 at August 29, 2020 and $17,436 at November 30, 2019 consisted of CDs. At August 29, 2020, the CDs had original terms averaging eight months, bearing interest at rates ranging from 0.10% to 2.00%. At August 29, 2020, the weighted average remaining time to maturity of the CDs was approximately five months and the weighted average yield of the CDs was approximately 0.31%. 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 August 29, 2020 and November 30, 2019 approximates their fair value.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
AUGUST 29, 2020
(Dollars in thousands except share and per share data)

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. Our primary non-recurring fair value estimates typically involve business acquisitions or the impairment of long-lived assets (see Note 6 regarding the impairment of goodwill, Note 9 regarding the impairment of certain long-lived assets and Note 11 regarding the impairment of lease right-of-use assets upon adoption of ASC Topic 842) which involve a combination of Level 2 and Level 3 inputs.

4. Accounts Receivable

Accounts receivable consists of the following:

	August 29, 2020			November 30, 2019
Gross accounts receivable	$	20,502		$	22,193
Allowance for doubtful accounts		(1,403	)		(815	)
Accounts receivable, net	$	19,099		$	21,378

Activity in the allowance for doubtful accounts for the nine months ended August 29, 2020 was as follows:

Balance at November 30, 2019	$	815
Additions charged to expense		727
Write-offs against allowance		(139	)
Balance at August 29, 2020	$	1,403

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 3.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
AUGUST 29, 2020
(Dollars in thousands except share and per share data)

5. 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 our Lane Venture and Bassett Outdoor lines 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:

	August 29, 2020			November 30, 2019
Wholesale finished goods	$	25,493		$	27,792
Work in process		531			733
Raw materials and supplies		14,255			17,293
Retail merchandise		31,774			31,534
Total inventories on first-in, first-out method		72,053			77,352
LIFO adjustment		(8,896	)		(8,688	)
Reserve for excess and obsolete inventory		(4,556	)		(2,362	)
Total Inventories	$	58,601		$	66,302

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.

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

	Wholesale Segment			Retail Segment			Total
Balance at November 30, 2019	$	2,054		$	308		$	2,362
Additions charged to expense		3,280			534			3,814
Write-offs		(1,491	)		(129	)		(1,620	)
Balance at August 29, 2020	$	3,843		$	713		$	4,556

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 2020 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
AUGUST 29, 2020
(Dollars in thousands except share and per share data)

6. Goodwill and Other Intangible Assets

Goodwill and other intangible assets consisted of the following:

	August 29, 2020
	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net
Intangibles subject to amortization
Customer relationships	$	3,550	$	(1,282	)	$	2,268
Technology - customized applications		834		(665	)		169
Total intangible assets subject to amortization	$	4,384	$	(1,947	)		2,437
Intangibles not subject to amortization:
Trade names							9,338
Goodwill							12,146
Total goodwill and other intangible assets						$	23,921

	November 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net
Intangibles subject to amortization
Customer relationships	$	3,550	$	(1,088	)	$	2,462
Technology - customized applications		834		(575	)		259
Total intangible assets subject to amortization	$	4,384	$	(1,663	)		2,721
Intangibles not subject to amortization:
Trade names							9,338
Goodwill							14,117
Total goodwill and other intangible assets						$	26,176

We normally test the carrying amount of our goodwill on an annual basis as of the beginning of our fourth quarter, the most recent annual test having been performed as of September 1, 2019 which resulted in the full impairment of the goodwill previously allocated to our retail reporting unit. Due to the impact of the COVID-19 pandemic, we performed an interim impairment assessment of our remaining goodwill as of May 30, 2020. In accordance with ASC Topic 350, Intangibles – Goodwill & Other (“ASC Topic 350”), we first assessed qualitative factors to determine whether it was more likely than not that the fair value of our reporting units was less than their carrying amounts as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test described in ASC Topic 350. The more likely than not threshold is defined as having a likelihood of more than 50 percent. Based on our qualitative assessment as described above, we concluded that it was necessary to perform the quantitative evaluation for the wood reporting unit in the second fiscal quarter. As a result of this test, we concluded that the carrying value of our wood reporting unit exceeded its fair value by an amount in excess of the goodwill previously allocated to the reporting unit. Therefore, we recognized a goodwill impairment charge of $1,971 for the nine months ended August 29, 2020. The determination of the fair value of our wood reporting unit was primarily based on an income approach that utilized discounted cash flows for the reporting unit and other Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosure (see Note 3). Under the income approach, we determined fair value based on the present value of the most recent cash flow projections for the reporting unit as of the date of the analysis and calculated a terminal value utilizing a terminal growth rate. The significant assumptions under this approach included, among others: income projections, which are dependent on future sales, new product introductions, customer behavior, competitor pricing, operating expenses, the discount rate, and the terminal growth rate. The cash flows used to determine fair value were dependent on a number of significant management assumptions such as our expectations of future performance and the expected future economic environment, which are partly based upon our historical experience as well as our estimate of the period of time required to recover from the impact of the COVID-19 pandemic. Our estimates are subject to change given the inherent uncertainty in predicting future results, including uncertainties surrounding the continuing impact of COVID-19 upon consumer spending and our ability to keep our retail store locations open to the public. Additionally, the discount rate and the terminal growth rate are based on our judgment of the rates that would be utilized by a hypothetical market participant.

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
AUGUST 29, 2020
(Dollars in thousands except share and per share data)

Changes in the carrying amounts of goodwill by reportable segment are as follows:

	Wholesale			Retail		Logistics		Total
Balance as of November 30, 2019	$	9,188		$	-	$	4,929	$	14,117
Goodwill impairment		(1,971	)		-		-		(1,971	)
Balance as of August 29, 2020	$	7,217		$	-	$	4,929	$	12,146

The carrying amounts of our goodwill at August 29, 2020 and November 30, 2019 included the following accumulated impairment losses:

	Wholesale		Retail		Logistics		Total
Balance as of November 30, 2019	$	-	$	1,926	$	-	$	1,926
Balance as of August 29, 2020	$	1,971	$	1,926	$	-	$	3,897

Amortization expense associated with intangible assets during the three and nine months ended August 29, 2020 and August 31, 2019 was as follows:

	Quarter Ended				Nine Months Ended
	August 29, 2020		August 31, 2019		August 29, 2020		August 31, 2019
Intangible asset amortization expense	$	95	$	95	$	284	$	284

Estimated future amortization expense for intangible assets that exist at August 29, 2020 is as follows:

Remainder of fiscal 2020	$	95
Fiscal 2021		379
Fiscal 2022		279
Fiscal 2023		259
Fiscal 2024		259
Fiscal 2025		259
Thereafter		907
Total	$	2,437

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(Dollars in thousands except share and per share data)

7. Bank Credit Facility

Bank Credit Facility

Our bank credit facility, which was amended effective June 15, 2020, provides for a line of credit of up to $50,000. At August 29, 2020, we had $2,181 outstanding under standby letters of credit against our line, leaving availability under our credit line of $47,819. In addition, we have outstanding standby letters of credit with another bank totaling $325. Under the terms of our credit facility, the maximum amount available under our credit line will remain at $50,000 through December 31, 2020, after which date the maximum availability will be reduced to $25,000. The line bears interest at the rate of LIBOR plus 1.9%, with a fee of 0.25% charged for the unused portion of the line and is secured by a general lien on our accounts receivable and inventory. In addition, all covenants based on financial ratios have been waived for the remainder of fiscal 2020. The credit facility matures on January 31, 2022.

8. 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 $8,706 and $8,779 as of August 29, 2020 and November 30, 2019, 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 $1,393 and $1,311 as of August 29, 2020 and November 30, 2019, respectively.

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

	August 29, 2020		November 30, 2019
Accrued compensation and benefits	$	655	$	655
Post employment benefit obligations		9,444		9,435
Total pension liability	$	10,099	$	10,090

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AUGUST 29, 2020
(Dollars in thousands except share and per share data)

Components of net periodic pension costs for our defined benefit plans for the three and nine months ended August 29, 2020 and August 31, 2019 are as follows:

	Quarter Ended				Nine Months Ended
	August 29, 2020		August 31, 2019		August 29, 2020		August 31, 2019
Service cost	$	43	$	47	$	130	$	141
Interest cost		67		110		201		331
Amortization of prior service costs		31		31		94		94
Amortization of loss		2		46		6		138
Net periodic pension cost	$	143	$	234	$	431	$	704

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

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 $1,720 and $1,767 as of August 29, 2020 and November 30, 2019, 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 $1,124 and $894 as of August 29, 2020 and November 30, 2019, respectively.

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:

	August 29, 2020		November 30, 2019
Accrued compensation and benefits	$	266	$	266
Post employment benefit obligations		2,578		2,395
Total deferred compensation liability	$	2,844	$	2,661

We recognized expense under our deferred compensation arrangements during the three and nine months ended August 29, 2020 and August 31, 2019 as follows:

	Quarter Ended				Nine Months Ended
	August 29, 2020		August 31, 2019		August 29, 2020		August 31, 2019
Deferred compensation expense	$	190	$	84	$	483	$	267

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AUGUST 29, 2020
(Dollars in thousands except share and per share data)

9. Other Gains & Losses

Fiscal 2020

Asset Impairment Charges

During the nine months ended August 29, 2020 we recorded $11,114 of non-cash impairment charges on the assets of five underperforming retail stores, including $6,239 for the impairment of operating lease right-of-use assets associated with the leased locations. Our estimates of the fair value of the impaired right-of-use assets included estimates of discounted cash flows based upon current market rents and other inputs which we consider to be Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurement and Disclosure (see Note 3).

During the nine months ended August 29, 2020 we incurred $1,070 of non-cash impairment charges in our wholesale segment, primarily due to the closing of our custom upholstery manufacturing facility in Grand Prairie, Texas, in May.

Litigation Expense

During the nine months ended August 29, 2020 we accrued an additional $1,050 for the estimated costs to resolve certain wage and hour violation claims that have been asserted against the Company and have received class action designation, bringing our total recorded reserve for these claims to $1,750 at August 29, 2020, which is included in other current liabilities and accrued expenses in our accompanying balance sheet. While the ultimate cost of resolving these claims may be substantially higher, the amount accrued represents our estimate of the most likely outcome of a mediated settlement.

Gains from Company-Owned Life Insurance

Other income (loss), net for the three and nine months ended August 29, 2020 includes a gain of $914 from the recognition of a death benefit from Company-owned life insurance. Other loss, net for the nine months ended August 31, 2019 included a gain of $629 arising from death benefits from Company-owned life insurance.

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. These employees are to receive pay equal to one-half their current salary plus benefits over a period of one year from the final day of each individual’s active employment. Accordingly, we recognized a charge of $835 during the nine months ended August 31, 2019. The unpaid balance of the obligation at August 29, 2020 and November 30, 2019 of $9 and $374, respectively, is included in other current liabilities and accrued expenses in our condensed consolidated balance sheets.

10. 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. See Note 9 regarding litigation arising from certain wage and hour violations which have been asserted against the Company.

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AUGUST 29, 2020
(Dollars in thousands except share and per share data)

11. Leases

During the first quarter of fiscal 2020, we adopted ASU 2016-02, Leases (Topic 842) and all related amendments. The guidance requires lessees to recognize substantially all leases on their balance sheet as a right-of-use (“ROU”) asset and a lease liability.

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. We determine if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all of the economic benefits from the use of that identified asset. Our real estate lease terms range from one to 15 years and generally have renewal options of between five and 15 years. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant economic and financial factors. Any options that meet this criteria are included in the lease term at lease commencement.

Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our ROU asset and lease liability, we determine our incremental borrowing rate by applying a spread above the U.S. Treasury borrowing rates. In the case an interest rate is implicit in a lease we will use that rate as the discount rate for that lease. Some of our leases contain variable rent payments based on a Consumer Price Index or percentage of sales. Due to the variable nature of these costs, they are not included in the measurement of the ROU asset and lease liability.

We adopted the standard utilizing the transition election to not restate comparative periods for the impact of adopting the standard and recognizing the cumulative impact of adoption in the opening balance of retained earnings. We elected the package of transition expedients available for expired or existing contracts, which allowed the carry-forward of historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.  In addition, we have elected the practical expedient to not separate lease and non-lease components when determining the ROU asset and lease liability and have elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements. We have also elected the hindsight practical expedient to determine the lease term for existing leases. In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term. We have made an accounting policy election to not recognize ROU assets and lease liabilities on the balance sheet for those leases with initial terms of one year or less and instead such lease obligations will be expensed on a straight-line basis over the lease term.

Adoption of the standard resulted in the recording of additional net lease-related assets and lease-related liabilities of $146,585 and $151,672, respectively, as of December 1, 2019. The difference between the additional lease assets and lease liabilities, net of the $1,302 deferred tax impact, was $3,785 and was recorded as an adjustment to retained earnings. This adjustment to retained earnings primarily represents the impairment of right-of-use assets associated with certain underperforming retail locations. Our estimates of the fair value of the impaired ROU assets included estimates of discounted cash flows based upon current market rents and other inputs which we consider to be Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurement and Disclosure (see Note 3). Our adoption of this standard did not have a material impact on our consolidated statements of operations, comprehensive income or cash flows.

We have negotiated with a number of our landlords to obtain relief in the form of rent deferrals or abatements of rent currently past due as a result of the effects of COVID-19 on our business. At August 29, 2020, the unpaid rent was $2,769 which primarily represents rent deferred to fiscal 2021 and is included in other current liabilities and accrued expenses in our accompanying condensed consolidated balance sheet. In accordance with FASB Staff Q&A - Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic ("FASB Staff Q&A") issued in April 2020, we have elected to account for any lease concessions resulting directly from COVID-19 as if the enforceable rights and obligations for the concessions existed in the respective contracts at lease inception and as such we will not account for any concession as a lease modification. Guidance from the FASB Staff Q&A provided methods to account for rent deferrals which include the option to treat the lease as if no changes to the lease contract were made or to treat deferred payments as variable lease payments. The FASB Staff Q&A allows entities to select the most practical approach and does not require the same approach be applied consistently to all leases. As a result, we expect to account for the deferrals as if no changes to the lease contract were made and will continue to recognize lease expense, on a straight-line basis, during the deferral period. For any abatements received, we will account for those as variable rent in the period in which the abatement is granted. For the three and nine months ended August 29, 2020, we were granted abatements against rent totaling $657.

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AUGUST 29, 2020
(Dollars in thousands except share and per share data)

Supplemental balance sheet information related to leases as of August 29, 2020 is as follows:

Operating leases:
Right of use assets	$	120,889
Lease liabilties, short-term		28,211
Lease liabilties, long-term		117,009
Finance leases:
Right of use assets (1)	$	1,322
Lease liabilties, short-term (2)		249
Lease liabilties, long-term (3)		1,072

(1)	Included in property & equipment, net in our condensed consolidated balance sheet.
(2)	Included in other current liabilites and accrued expenses in our condensed consolidated balance sheet.
(3)	Included in other long-term liabilites and accrued expenses in our condensed consolidated balance sheet.

Our right-of-use assets under operating leases by segment as of August 29, 2020 are as follows:

Wholesale	$	8,028
Retail		95,815
Logistical services		17,046
Total right of use assets	$	120,889

The components of our lease cost for the three and nine months ended August 29, 2020 are as follows:

	Quarter Ended			Nine Months Ended
	August 29, 2020			August 31, 2020
Lease cost:
Operating lease cost	$	8,441		$	26,005
Financing lease cost:
Amortization of right-of-use assets		46			103
Interest on lease liabilities		13			29
Short-term lease cost		423			1,221
Variable lease cost (net of abatements received)		(624	)		(560	)
Sublease income		(395	)		(1,183	)
Total lease cost	$	7,904		$	25,615

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AUGUST 29, 2020
(Dollars in thousands except share and per share data)

Supplemental lease disclosures as of August 29, 2020 and for the nine months then ended are as follows:

	Operating			Financing
For the nine months ended August 29, 2020:
Cash paid for amounts included in the measurements of lease liabilities	$	25,113		$	124
Lease liabilities arising from new right-of-use assets		5,426			1,426
As of August 29, 2020:
Weighted average remaining lease terms (years)		6.3			5.0
Weighted average discount rates		5.01	%		4.56	%

Future payments under our leases and the present value of the obligations as of August 29, 2020 are as follows:

	Operating Leases		Financing Leases
Remainder of fiscal 2020	$	9,354	$	95
Fiscal 2021		33,740		382
Fiscal 2022		30,431		382
Fiscal 2023		25,350		382
Fiscal 2024		18,462		311
Fiscal 2025		15,125		197
Thereafter		38,127		33
Total lease payments		170,589		1,782
Less: interest		25,369		461
Total lease obligations	$	145,220	$	1,321

We sublease a small number of our leased locations to our licensees for operation as Bassett Home Furnishings (“BHF”) network stores. The terms of these leases generally match those of the lease we have with the lessor. Minimum future lease payments due to us under these subleases are as follows:

Remainder of fiscal 2020	$	379
Fiscal 2021		1,260
Fiscal 2022		1,070
Fiscal 2023		754
Fiscal 2024		648
Fiscal 2025		588
Thereafter		157
Total minimum future rental income	$	4,856

Lease Guarantees

We also have guaranteed certain lease obligations of licensee operators. Lease guarantees range from one to ten years. We were contingently liable under licensee lease obligation guarantees in the amount of $1,802 and $1,776 at August 29, 2020 and November 30, 2019, 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 August 29, 2020 and November 30, 2019 was not material.

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AUGUST 29, 2020
(Dollars in thousands except share and per share data)

12. Earnings (Loss) Per Share

The following reconciles basic and diluted earnings (loss) per share:

	Net Income (Loss)			Weighted Average Shares		Net Income (Loss) Per Share
For the quarter ended August 29, 2020:
Basic earnings per share	$	2,178			9,955,382	$	0.22
Add effect of dilutive securities:
Options and restricted shares		-			16,263		-
Diluted earnings per share	$	2,178			9,971,645	$	0.22
For the quarter ended August 31, 2019:
Basic earnings per share	$	2,157			10,212,259	$	0.21
Add effect of dilutive securities:
Options and restricted shares		-			28,276		-
Diluted earnings per share	$	2,157			10,240,535	$	0.21
For the nine months ended August 29, 2020:
Basic loss per share	$	(16,964	)		9,979,861	$	(1.70	)
Add effect of dilutive securities:
Options and restricted shares*		-			-		-
Diluted loss per share	$	(16,964	)		9,979,861	$	(1.70	)
For the nine months ended August 31, 2019:
Basic earnings per share	$	3,210			10,368,891	$	0.31
Add effect of dilutive securities:
Options and restricted shares		-			26,914		-
Diluted earnings per share	$	3,210			10,395,805	$	0.31

*Due to the net loss, the potentially dilutive securities would have been anti-dilutive and are therefore excluded.

For the three and nine months ended August 29, 2020 and August 31, 2019, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive:

	Quarter Ended				Nine Months Ended
	August 29, 2020		August 31, 2019		August 29, 2020		August 31, 2019
Stock options		-		-		5,250		-
Unvested shares		3,500		45,653		88,153		45,653
Total anti-dilutive securities		3,500		45,653		93,403		45,653

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(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 include Lane Venture, 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 income (loss), net, in our condensed consolidated statements of operations.

● 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 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 $16,826 and $54,407 for the three and nine months ended August 29, 2020, respectively, and $18,289 and $59,169 for the three and nine months ended August 31, 2019, respectively.

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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AUGUST 29, 2020
(Dollars in thousands except share and per share data)

The following table presents our segment information:

	Quarter Ended						Nine Months Ended
	August 29, 2020			August 31, 2019			August 29, 2020			August 31, 2019
Sales Revenue
Wholesale	$	55,443		$	62,690		$	153,588		$	198,602
Retail - Company-owned stores		48,144			66,539			147,161			198,736
Logistical services		17,848			18,899			54,422			60,743
Inter-company eliminations:
Furniture and accessories		(23,246	)		(30,860	)		(68,466	)		(95,789	)
Logistical services		(6,630	)		(7,849	)		(19,225	)		(23,842	)
Consolidated	$	91,559		$	109,419		$	267,480		$	338,450
Income (Loss) from Operations
Wholesale	$	3,324		$	3,044		$	(1,344	)	$	10,399
Retail - Company-owned stores		(1,585	)		(431	)		(12,004	)		(6,430	)
Logistical services		1,022			610			15			1,574
Inter-company elimination		(14	)		177			2,266			342
Early retirement program		-			-			-			(835	)
Asset impairment charges		-			-			(12,184	)		-
Goodwill impairment charge		-			-			(1,971	)		-
Litigation expense		-			-			(1,050	)		-
Consolidated	$	2,747		$	3,400		$	(26,272	)	$	5,050
Depreciation and Amortization
Wholesale	$	747		$	752		$	2,338		$	2,397
Retail - Company-owned stores		1,516			1,612			4,958			4,661
Logistical services		747			993			2,953			3,034
Consolidated	$	3,010		$	3,357		$	10,249		$	10,092
Capital Expenditures
Wholesale	$	286		$	670		$	979		$	2,810
Retail - Company-owned stores		92			1,482			695			6,872
Logistical services		45			186			540			969
Consolidated	$	423		$	2,338		$	2,214		$	10,651

	As of		As of
Identifiable Assets	August 29, 2020		November 30, 2019
Wholesale	$	156,464	$	144,392
Retail - Company-owned stores		180,252		91,997
Logistical services		57,600		39,377
Consolidated	$	394,316	$	275,766

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(Dollars in thousands except share and per share data)

Wholesale shipments by type

	Quarter Ended								Nine Months Ended
	August 29, 2020				August 31, 2019				August 29, 2020				August 31, 2019
Bassett Custom Upholstery	$	31,016	55.9	%	$	36,809	58.7	%	$	90,283	58.8	%	$	115,200	58.0	%
Bassett Leather		5,804	10.5	%		4,480	7.1	%		13,559	8.8	%		14,714	7.4	%
Bassett Custom Wood		9,582	17.3	%		11,757	18.8	%		26,504	17.3	%		33,958	17.1	%
Bassett Casegoods		9,041	16.3	%		9,644	15.4	%		23,242	15.1	%		32,263	16.2	%
Accessories (1)		-	0.0	%		-	0.0	%		-	0.0	%		2,467	1.2	%
Total	$	55,443	100.0	%	$	62,690	100.0	%	$	153,588	100.0	%	$	198,602	100.0	%

(1) Beginning with the third quarter of fiscal 2019, our wholesale segment no longer purchases accessory items for resale to our retail segment or to third party customers such as licensees or independent furniture retailers. Our retail segment and third-party customers now source their accessory items directly from the accessory vendors.

14. Revenue Recognition

We recognize revenue when we transfer promised goods or services to our customers in an amount that reflects the consideration we expect 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. At retail, transfer occurs and revenue is recognized upon delivery of goods to the customer. All wholesale and retail revenues are recorded net of estimated returns and allowances based on historical patterns. We typically collect a significant portion of the purchase price from our retail customers as a deposit upon order, with the balance typically collected upon delivery. These customer deposits are carried on our balance sheet as a current liability until delivery is fulfilled and amounted to $35,721 and $25,341 as of August 29, 2020 and November 30, 2019, respectively. Substantially all of the customer deposits held at November 30, 2019 related to performance obligations that were satisfied during the current year-to-date period and have therefore been recognized in revenue for the nine months ended August 29, 2020.

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 of the amount of time freight has been in transit as of the reporting date compared with our estimate of the total required time for the deliveries. The balances of assets recognized for shipping revenues earned but not billed as of August 29, 2020 and November 30, 2019 were not material. 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.

We exclude from revenue all amounts collected from customers for sales tax. We do not disclose amounts allocated to remaining unsatisfied performance obligations as they are expected to be satisfied within one year or less.

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

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PART I-FINANCIAL INFORMATION-CONTINUED
BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
AUGUST 29, 2020
(Dollars in thousands except share and per share data)

15. Changes to Stockholders’ Equity

The following changes in our stockholders’ equity occurred during the three and nine months ended August 29, 2020 and August 31, 2019:

	Quarter Ended						Nine Months Ended
	August 29, 2020			August 31, 2019			August 29, 2020			August 31, 2019
Common Stock:
Beginning of period	$	49,977		$	52,262		$	50,581		$	52,638
Issuance of common stock		80			58			198			339
Forfeited shares		-			-			(35	)
Purchase and retirement of common stock		(174	)		(1,742	)		(861	)		(2,399	)
End of period	$	49,883		$	50,578		$	49,883		$	50,578
Common Shares Issued and Outstanding:
Beginning of period		9,995,356			10,452,345			10,116,291			10,527,636
Issuance of common stock		16,064			11,734			39,572			67,935
Forfeited shares		-			-			(7,000	)		-
Purchase and retirement of common stock		(34,907	)		(348,383	)		(172,350	)		(479,875	)
End of period		9,976,513			10,115,696			9,976,513			10,115,696
Additional Paid-in Capital:
Beginning of period	$	-		$	-		$	195		$	-
Issuance of common stock		(21	)		28			19			(69	)
Forfeited shares		-			-			35			-
Purchase and retirement of common stock		(99	)		(270	)		(563	)		(649	)
Stock based compensation