5. VARIABLE INTEREST ENTITY

Based upon the criteria set forth in ASC 810, Consolidation, the Company has determined that it was the primary beneficiary of one variable interest entity (“VIE”) as of October 29, 2017 and January 29, 2017, as the Company absorbs significant economics of the entity and has the power to direct the activities that are considered most significant to the entity.

The Company leases certain retail store facilities and office buildings from SRV, a VIE whose primary purpose and activity is to own this real property. SRV is a Wisconsin limited liability company that is owned by the majority shareholder of the Company. The Company considers itself the primary beneficiary for SRV as the Company is expected to receive a majority of SRV’s expected residual returns based on the activity of SRV. As the Company is the primary beneficiary, it consolidates SRV and the leases are eliminated in consolidation.

The condensed consolidated balance sheets include the following amounts as a result of the consolidation of SRV as of October 29, 2017 and January 29, 2017:


	October 29, 2017		January 29, 2017
(in thousands)
Cash	$	656	$	139
Other receivables		20		9
Property and equipment, net		4,102		3,248
Other assets, net		14		5
Total assets	$	4,792	$	3,401

Other current liabilities	$	177	$	792
Long-term debt		1,413		—
Noncontrolling interest in VIE		3,202		2,609
Total liabilities and shareholders' equity	$	4,792	$	3,401

On August 18, 2017, the Company entered into a lease agreement with TRI Holdings, LLC (“TRI”), the developer of the Company’s future headquarters in Mt. Horeb, Wisconsin. The Company expects to take occupancy of the future headquarters on November 1, 2018. The Company determined it had a variable interest in TRI, however, the Company does not consolidate TRI, as the Company is not the primary beneficiary.

During the construction phase of the Company’s future headquarters, the Company is considered the owner for accounting purposes, as noted in footnote one, under build-to-suit lease. As of October 29, 2017, the Company capitalized $8.5 million in property & equipment and recorded $8.5 million non-current liability related to build-to-suit transactions, which are included in the balances disclosed under footnote one.

In conjunction with the headquarters lease, the Company invested $6.3 million in a trust (see Note 4 Investment) that funded the mortgage to TRI for the construction of the Company’s future headquarters. The Company does not consolidate the trust as the Company is not the primary beneficiary.