BASSETT FURNITURE INDUSTRIES INC Goodwill & Intangibles Disclosure

8. Goodwill and Other Intangible Assets

 

Goodwill and other intangible assets consisted of the following:

 

		November 30, 2024
		Gross Carrying Amount				Accumulated Amortization				Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships		$	512			$	(392	)		$	120
Intangibles not subject to amortization:
Trade name											6,848
Goodwill											7,217
Total goodwill and other intangible assets										$	14,185

 

		November 25, 2023
		Gross Carrying Amount				Accumulated Amortization				Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships		$	512			$	(337	)		$	175
Intangibles not subject to amortization:
Trade names											8,675
Goodwill											7,217
Total goodwill and other intangible assets										$	16,067

 

We performed the annual test for impairment of the carrying value of our goodwill as of the beginning of the fourth quarter of fiscal 2024. Based on the initial qualitative analysis performed under ASC Topic 350, we concluded that is was not more likely than not that the carrying value of our upholstery reporting unit within our wholesale segment exceeded its fair value. We performed the annual test for impairment of the carrying value of our goodwill as of the beginning of the fourth quarter of fiscal 2023. Based on the initial qualitative analysis performed under ASC Topic 350, we concluded that it was not more likely than not that the carrying value of our upholstery reporting unit within our wholesale segment exceeded its fair value. However, due to the actual and expected future underperformance of our Noa Home reporting unit relative to management's original expectations, we performed a strategic review of the operations as of the beginning of the fourth quarter and concluded that Noa Home should exit the Australian market and focus more on the North American market. Coupled with the financial underperformance and the exit of Australia, we performed a quantitative test of the carrying value of the goodwill recognized as part of the 2022 acquisition of Noa Home and concluded that it was necessary to fully impair the carrying value of the Noa Home goodwill, resulting in a non-cash impairment charge of $5,409 in fiscal 2023.

 

The determination of the fair value of our reporting units is based on a combination of a market approach, that considers benchmark company market multiples and comparable transactions occurring within the last two years and an income approach, that utilizes discounted cash flows for each 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 4) The valuation of the Noa Home reporting unit was primarily based on the market approach due to significant uncertainty in the future cash flows of Noa Home. Under the income approach, we determine fair value based on the present value of the most recent cash flow projections for each reporting unit as of the date of the analysis and calculate a terminal value utilizing a terminal growth rate. The significant assumptions under this approach include, 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 are 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. Our estimates are subject to change given the inherent uncertainty in predicting future results. 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. As part of the goodwill impairment testing, we also consider our market capitalization in assessing the reasonableness of the combined fair values estimated for our reporting units.

 

 

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

 

		Wholesale				Retail				Corporate and Other				Total
Balance as of November 26, 2022		$	7,217			$	-			$	5,554			$	12,771
Foreign currency translation adjustment			-				-				(145	)			(145	)
Full impairment of Noa Home goodwill			-				-				(5,409	)			(5,409	)
Balance as of November 25, 2023			7,217				-				-				7,217
No changes in fiscal 2024			-				-				-				-
Balance as of November 30, 2024		$	7,217			$	-			$	-			$	7,217

 

Accumulated impairment losses were $9,306, $9,306 and $3,897 at November 30, 2024, November 25, 2023 and November 26, 2022, respectively.

 

The weighted average useful lives of our finite-lived intangible assets and remaining amortization periods as of November 30, 2024 are as follows:

 

		Useful Life in Years				Remaining Amortization Period in Years
Customer relationships			9				3

 

Our trade name intangible asset at November 30, 2024 is associated with Lane Venture. Because it is our intention to maintain and grow this brand, it is considered to be an indefinite-lived intangible asset. At November 25, 2023 our trade name intangible assets also included an asset for the Noa Home trade name which had been considered an indefinite-lived intangible asset upon acquisition in 2022. However, in connection with our decision to cease operations at Noa Home and liquidate its assets, the carrying value of the Noa Home trade name was fully impaired during the second quarter of fiscal 2024. The amortization expense associated with finite-lived intangible assets during fiscal 2024, 2023 and 2022 was $57 each year and is included in selling, general and administrative expense in our consolidated statement of operations. All expense arising from the amortization of intangible assets is associated with our wholesale segment. Estimated future amortization expense for intangible assets that exist at November 30, 2024 is as follows:

 

Fiscal 2025			57
Fiscal 2026			57
Fiscal 2027			6
Fiscal 2028			-
Fiscal 2029			-
Total		$	120