Note 18 - Discontinued Operations

12 Months Ended

Nov. 25, 2023

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

18. Discontinued Operations

On January 31, 2022, we entered into a definitive agreement to sell substantially all of the assets of Zenith to J.B. Hunt. The sale was completed on February 28, 2022, at which time we received the following net proceeds:

Sales price prior to post-closing working capital adjustment	$	86,939
Less:
Amount held in escrow for contingencies related to representations and warranties (1)		1,000
Seller expenses paid at closing		418
Working capital adjustment paid to buyer		987
Net proceeds from the sale	$	84,534

(1) This was held in escrow until the first anniversary of the sale, at which time the full amount was released to the Company on March 2, 2023. This amount was included in other current assets in the accompanying condensed consolidated balance sheet at November 26, 2022.

The sales price was subject to customary post-closing working capital adjustments which were paid during the second half of fiscal 2022 and resulted in a pre-tax gain from the sale of Zenith of $52,534.

The operations of our logistical services segment, which consisted entirely of the operations of Zenith, are presented in the accompanying consolidated statements of operations as discontinued operations.

Following the sale of Zenith, certain of Zenith’s liabilities primarily representing reserves and accrued liabilities for pre-disposal workers’ compensation, health insurance and auto liability claims were retained by Bassett. The remaining balance of these reserves and accruals totaled $358 and $639 at November 25, 2023 and November 26, 2022, respectively, and are included in other current liabilities and accrued expenses in the accompanying condensed consolidated balance sheet.

The following table summarizes the major classes of line items constituting income of the discontinued operations, as reported in the consolidated statements of operations for fiscal 2023, 2022 and 2021:

	2023		2022			2021
Major line items constituting pretax income of discontinued operations:
Logistical services revenue	$	-	$	16,776		$	55,648
Cost of logistical services		-		15,001			53,905
Other loss, net		-		(63	)		(260	)
Income from operations of logistical services		-		1,712			1,483
Gain on disposal		-		52,534			-
Pretax income of discontinued operations		-		54,246			1,483
Income tax expense		-		14,261			362
Income from discontinued operations, net of tax	$	-	$	39,985		$	1,121

The amounts for revenue and costs of logistical services shown above represent the results of Zenith’s business transactions with third parties. Zenith also charged Bassett for logistical services provided to our wholesale segment in the amount of $9,121 during 2022 prior to disposal, and $31,329 for all of 2021. We have entered into a service agreement with J.B. Hunt for the continuation of these services for a period of seven years following the sale of Zenith. Subsequent to the sale, we incurred $26,125 and $27,604 of expense during 2023 and 2022, respectively, for the performance of logistical services.

Included in other loss, net, is interest arising from finance leases assumed by J.B. Hunt as part of the transaction. Such interest amounted to $78 and $289 for 2022 and 2021, respectively.

The following table summarizes the cash flows generated by discontinued operations during 2023, 2022 and 2021:

	2023 (1)		2022 (1)			2021
Cash provided by operating activities	$	-	$	1,681		$	4,082
Cash used in investing activities		-		(81	)		(4,508	)
Cash used in financing activities		-		(371	)		(1,259	)
Net cash provided by (used in) discontinued operations	$	-	$	1,229		$	(1,685	)

(1) Excludes net proceeds from the sale of Zenith.