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 ~~October 29, 2017~~ May 2, 2021

Commission file number 000-25349

HOOKER FURNITURE CORPORATION

(Exact name of registrant as specified in its charter)

Virginia	54-0251350
(State or other jurisdiction of incorporation or organization)	(IRS employer identification no.)

440 East Commonwealth Boulevard, Martinsville, VA 24112

(Address of principal executive offices, zip code)

(276) 632-2133

(~~Registrant’s~~Registrant’s telephone number, including area code)

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 (or for such shorter period that the registrant was required to file such reports), 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, ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

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

Large accelerated Filer ☐	Accelerated filer ☒
Non-accelerated Filer ☐ ~~(Do not check if a smaller reporting company)~~	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 ☒

~~Indicate the number of shares outstanding of each~~

Securities registered pursuant to Section 12(b) of the ~~issuer’s classes~~Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	HOFT	NASDAQ Global Select Market

As of June 4, 2021, there were 11,908,956 shares of the registrant’s common stock ~~as of~~ ~~December 1, 2017:~~outstanding.

~~Common stock, no par value~~	~~11,762,409~~
~~(Class of common stock)~~	~~(Number of shares)~~

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20 15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35 26

Item 4.	Controls and Procedures	36 26

PART II. OTHER INFORMATION

Item ~~1A.~~6.	~~Risk Factors~~Exhibits	37 27

~~Item 6.~~		~~Exhibits~~	38

Signature		39 28

~~Table of Contents~~

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

As of October 29, January 29,
2017 2017
(unaudited)
Assets
Current assets
    Cash and cash equivalents $ 32,357 $ 39,792
    Trade accounts receivable, net 79,850 92,578
    Inventories 83,550 75,303
    Income Tax Recoverable 954 -
    Prepaid expenses and other current assets 5,220 4,244
         Total current assets 201,931 211,917
Property, plant and equipment, net 30,846 25,803
Cash surrender value of life insurance policies 23,322 22,366
Deferred taxes 5,512 7,264
Intangible assets, net 37,825 25,923
Goodwill 40,832 23,187
Other assets 2,249 2,236
         Total non-current assets 140,586 106,779
               Total assets $ 342,517 $ 318,696

Liabilities and Shareholders’ Equity
Current liabilities
    Current portion of term loan $ 7,526 $ 5,817
    Trade accounts payable 33,748 36,552
    Accrued salaries, wages and benefits 8,373 8,394
    Income tax accrual - 4,323
    Customer deposits 4,290 5,605
    Other accrued expenses 3,338 3,369
         Total current liabilities 57,275 64,060
Long term debt 47,660 41,772
Deferred compensation 11,043 10,849
Pension plan 3,017 3,499
Other long-term liabilities 852 589
Total long-term liabilities 62,572 56,709
              Total liabilities 119,847 120,769

Shareholders’ equity
    Common stock, no par value, 20,000 shares authorized,
    11,762 and 11,563 shares issued and outstanding on each date
48,910 39,753
    Retained earnings 173,245 157,688
    Accumulated other comprehensive income 515 486
              Total shareholders’ equity 222,670 197,927
                   Total liabilities and shareholders’ equity $ 342,517 $ 318,696

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

As of	May 2,			January 31,
	2021			2021
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	61,596		$	65,841
Trade accounts receivable, net		91,336			83,290
Inventories		81,475			70,159
Prepaid expenses and other current assets		6,240			4,432
Total current assets		240,647			223,722
Property, plant and equipment, net		27,853			26,780
Cash surrender value of life insurance policies		25,935			25,365
Deferred taxes		12,400			14,173
Operating leases right-of-use assets		32,800			34,613
Intangible assets, net		25,641			26,237
Goodwill		490			490
Other assets		1,549			893
Total non-current assets		126,668			128,551
Total assets	$	367,315		$	352,273

Liabilities and Shareholders’ Equity
Current liabilities
Trade accounts payable	$	39,589		$	32,213
Accrued salaries, wages and benefits		6,084			7,136
Income tax accrual		1,536			501
Customer deposits		7,259			4,256
Current portion of lease liabilities		6,381			6,650
Other accrued expenses		2,796			3,354
Total current liabilities		63,645			54,110
Deferred compensation		11,127			11,219
Lease liabilities		27,980			29,441
Total long-term liabilities		39,107			40,660
Total liabilities		102,752			94,770

Shareholders’ equity
Common stock, no par value, 20,000 shares authorized, 11,909 and 11,888 shares issued and outstanding on each date		53,004			53,323
Retained earnings		212,291			204,988
Accumulated other comprehensive loss		(732	)		(808	)
Total shareholders’ equity		264,563			257,503
Total liabilities and shareholders’ equity	$	367,315		$	352,273

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

Table of Contents

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

(In thousands, except per share data)

(Unaudited)

~~(Unaudited)~~

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended				Thirteen Weeks Ended
	October 29,		October 30,		October 29,		October 30,		May 2,		May 3,
	2017		2016		2017		2016		2021		2020

Net sales	$	157,934	$	145,298	$	445,114	$	403,292	$	162,861	$	104,597

Cost of sales		123,656		114,372		349,576		317,289		129,279		85,944

Gross profit		34,278		30,926		95,538		86,003		33,582		18,653

Selling and administrative expenses		22,449		20,653		64,139		61,038		20,743		19,177
Goodwill impairment charges										0		39,568
Trade name impairment charges										0		4,750
Intangible asset amortization		624		334		1,291		2,801		596		596

Operating income		11,205		9,939		30,108		22,164
Operating income/(loss)										12,243		(45,438	)

Other income, net		330		218		1,052		636
Other income/(expense), net										4		(42	)
Interest expense, net		327		245		860		755		31		208

Income before income taxes		11,208		9,912		30,300		22,045
Income/(loss) before income taxes										12,216		(45,688	)

Income tax expense		4,006		3,453		10,574		7,737
Income tax expense/(benefit)										2,773		(10,869	)

Net income	$	7,202	$	6,459	$	19,726	$	14,308
Net income/(loss)									$	9,443	$	(34,819	)

Earnings per share
Earnings/(loss) per share
Basic	$	0.62	$	0.56	$	1.70	$	1.24	$	0.79	$	(2.95	)
Diluted	$	0.61	$	0.56	$	1.69	$	1.23	$	0.78	$	(2.95	)

Weighted average shares outstanding:
Basic		11,679		11,537		11,596		11,528		11,833		11,798
Diluted		11,700		11,559		11,626		11,556		11,972		11,798

Cash dividends declared per share	$	0.12	$	0.10	$	0.36	$	0.30	$	0.18	$	0.16

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

Table of Contents

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)

Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, October 30, October 29, October 30,
2017 2016 2017 2016

Net Income $ 7,202 $ 6,459 $ 19,726 $ 14,308
       Other comprehensive income (loss):
                 Amortization of actuarial loss (gain) 15 (18 ) 46 (53 )
                 Income tax effect on amortization (5 ) 7 (17 ) 19
        Adjustments to net periodic benefit cost 10 (11 ) 29 (34 )

Total comprehensive Income $ 7,212 $ 6,448 $ 19,755 $ 14,274

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands)

(Unaudited)

	Thirteen Weeks Ended
	May 2,			May 3,
	2021			2020

Net Income/(Loss)	$	9,443		$	(34,819	)
Other comprehensive income (loss):
Amortization of actuarial loss		100			84
Income tax effect on amortization		(24	)		(20	)
Adjustments to net periodic benefit cost		76			64

Total Comprehensive Income/(Loss)	$	9,519		$	(34,755	)

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

Table of Contents

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

~~(Unaudited)~~

							For the
	Thirty-Nine Weeks Ended						Thirteen Weeks Ended
	October 29,			October 30,			May 2,			May 3,
	2017			2016			2021			2020
Operating Activities:
Net income	$	19,726		$	14,308
Net income/(loss)							$	9,443		$	(34,819	)
Adjustments to reconcile net income to net cash provided by operating activities:
Goodwill and intangible asset impairment charges								0			44,318
Depreciation and amortization		4,399			6,340			1,714			1,685
Gain on disposal of assets		(37	)		(60	)
Deferred income tax expense (benefit)		1,735			(1,767	)
Deferred income tax expense								1,749			(10,045	)
Noncash restricted stock and performance awards		1,175			927			(319	)		605
Provision for doubtful accounts		125			(168	)
Benefit from doubtful accounts and sales allowances								(791	)		(328	)
Gain on life insurance policies		(453	)		(665	)		(439	)		(571	)
Changes in assets and liabilities:
Trade accounts receivable		16,179			(105	)		(7,255	)		24,129
Inventories								(11,316	)		10,763
Income tax recoverable		(954	)		-			0			(867	)
Inventories		(5,867	)		6,597
Prepaid expenses and other current assets		(836	)		(306	)		(2,441	)		(1,468	)
Trade accounts payable		(3,529	)		(319	)		7,373			(12,149	)
Accrued salaries, wages, and benefits		(539	)		(332	)		(1,053	)		(1,661	)
Accrued income taxes		(4,323	)		1,142			1,035			0
Customer deposits		(1,314	)		4,485			3,004			673
Operating lease liabilities								84			367
Other accrued expenses		(254	)		2,409			(558	)		(1,720	)
Deferred compensation		(435	)		(1,265	)		8			12
Other long-term liabilities		267			44
Net cash provided by operating activities	$	25,065		$	31,265		$	238		$	18,924

Investing Activities:
Acquisitions	$	(32,650	)	$	(86,062	)
Purchases of property and equipment		(2,708	)		(1,905	)		(2,188	)		(380	)
Proceeds received on notes from sale of assets		98			116
Premiums paid on life insurance policies								(155	)		(162	)
Proceeds received on life insurance policies		-			908			0			673
Premiums paid on life insurance policies		(639	)		(682	)
Net cash used in investing activities		(35,899	)		(87,625	)
Net cash (used in)/provided by investing activities								(2,343	)		131

Financing Activities:
Proceeds from long-term debt	$	12,000		$	60,000
Cash dividends paid								(2,140	)		(1,894	)
Payments for long-term debt		(4,393	)		(10,825	)		0			(1,952	)
Debt issuance cost		(39	)		(165	)
Cash dividends paid		(4,169	)		(3,466	)
Net cash provided by financing activities		3,399			45,544
Cash used in financing activities								(2,140	)		(3,846	)

Net decrease in cash and cash equivalents		(7,435	)		(10,816	)
Net (decrease)/increase in cash and cash equivalents								(4,245	)		15,209
Cash and cash equivalents - beginning of year		39,792			53,922			65,841			36,031
Cash and cash equivalents - end of quarter	$	32,357		$	43,106		$	61,596		$	51,240

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	14,103		$	8,360
Cash paid for interest, net		754			547		$	0		$	240
Cash (refund)/paid for income taxes								(9	)		43

Non-cash transactions:
Acquisition cost paid in common stock	$	8,396		$	20,267
Increase/(decrease) in lease liabilities arising from obtaining right-of-use assets							$	6		$	(3	)
Increase in property and equipment through accrued purchases		26			22			3			51

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

Table of Contents

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except per share data)

(Unaudited)

									Accumulated
									Other			Total
	Common Stock					Retained			Comprehensive			Shareholders'
	Shares		Amount			Earnings			Income (loss)			Equity
Balance at February 2, 2020		11,838	$	51,582		$	223,252		$	(713	)	$	274,121
Net loss							(34,819	)					(34,819	)
Unrealized loss on defined benefit plan, net of tax of $20										64			64
Cash dividends paid and accrued ($0.16 per share)							(1,893	)					(1,893	)
Restricted stock grants, net of forfeitures		33		169									169
Restricted stock compensation cost				218									218
Performance-based restricted stock units costs				218									218
Balance at May 3, 2020		11,871	$	52,187		$	186,540		$	(649	)	$	238,078




Balance at January 31, 2021		11,888	$	53,323		$	204,988		$	(808	)	$	257,503
Net income							9,443						9,443
Unrealized loss on defined benefit plan, net of tax of $24										76			76
Cash dividends paid and accrued ($0.18 per share)							(2,140	)					(2,140	)
Restricted stock grants, net of forfeitures		21											-
Restricted stock compensation cost				274									274
Performance-based restricted stock units costs				147									147
PSU awards				(740	)								(740	)
Balance at May 2, 2021		11,909	$	53,004		$	212,291		$	(732	)	$	264,563

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

Table of Contents

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar and share amounts in tables, except per share amounts, in thousands unless otherwise indicated)

(Unaudited)

~~(Unaudited)~~

For the ~~Thirty-Nine~~Thirteen Weeks Ended ~~October 29, 2017~~May 2, 2021

1.Preparation of Interim Financial Statements

1.	~~Preparation of Interim Financial Statements~~

The condensed consolidated financial statements of Hooker Furniture Corporation and subsidiaries (referred to as “we,” “us,” “our,” “Hooker” or the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). All references to the “Hooker”, “Hooker Division” or “traditional Hooker” divisions or companies refer to the current components of our Hooker Casegoods and Upholstery operating segments, including Shenandoah since its characteristics (e.g. management, price points, margins and domestic manufacturing base), are like that of the other components of what we previously defined as the “legacy Hooker” business. In the opinion of management, these statements include all adjustments necessary for a fair statement of the results of all interim periods reported herein. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) are condensed or omitted pursuant to SEC rules and regulations. However, we believe that the disclosures made are adequate for a fair presentation of our results of operations and financial position. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended January ~~29, 2017~~31, 2021 (“~~2017~~2021 Annual Report”). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect both the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from our estimates. Operating results for the interim periods reported herein may not be indicative of the results expected for the fiscal year.

The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” ~~“third~~“first quarter” or “quarterly period”) that began ~~July 31, 2017,~~February 1, 2021 and ~~the thirty-nine week~~ended May 2, 2021. This report discusses our results of operations for this period ~~(also referred to as “nine months,” “nine-month period” or “year-to-date period”) that began January 30, 2017, which both ended October 29, 2017,~~ compared to the thirteen-week period that began ~~August 1, 2016~~February 3, 2020 and ~~the thirty-nine week period that began February 1, 2016, which both~~ ended ~~October 30, 2016;~~May 3, 2020; and our financial condition as of ~~October 29, 2017~~May 2, 2021 compared to January ~~29, 2017.~~31, 2021.

References in these notes to the condensed consolidated financial statements of the Company to:

■

the ~~2018~~2022 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began ~~January 30, 2017~~February 1, 2021 and will end January ~~28, 2018;~~30, 2022; and

■

the ~~2017~~2021 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began February ~~1, 2016~~3, 2020 and ended January ~~29, 2017.~~31, 2021.

2. Recently Adopted Accounting Policies

~~References~~

In August 2018, the FASB issued ASU No. 2018-14, Compensation —Retirement Benefits —Defined Benefit Plans —General (Subtopic 715-20) —Disclosure Framework —Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). The amendments in this ~~document to “SFI” refer to~~update change the ~~counterparties to~~disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans. It eliminates requirements for certain disclosures that are no longer considered cost beneficial and requires new disclosures that the ~~asset purchase agreement, Shenandoah Furniture, Inc. and its two former shareholders, entered into on September 6, 2017. References in~~FASB considers pertinent. The guidance is effective for fiscal years ending after December 15, 2020. We adopted this ~~document to “Shenandoah” or “Shenandoah Furniture” refer to the newly acquired business operations of SFI acquired on September 29, 2017.~~

On September 29, 2017, we acquired substantially all of the assets and assumed certain liabilities of SFI for $32.7 million in cash and the issuance of 176,018 shares of our common stock valued at $8.4 million (such numbers are subject to agreed upon post-closing working capital adjustments). Based on the way we manage, evaluate and internally report our operations, we determined that Shenandoah’s newly acquired business will be reported in our Upholstery segment.

The results of operations of Shenandoah are included in our results of operations beginning on September 29, 2017 through the end of our fiscal 2018 third quarter ended on October 29, 2017. Consequently, comparable prior-year information for Shenandoah is not includedguidance in the fiscal 2022 first quarter. The adoption of ASU 2018-14 did not have a material impact on our consolidated financial statements ~~presented in this report. The acquisition is discussed in greater detail below in Note 2. “Acquisition.”~~or disclosures.

3.Accounts Receivable

	May 2,			January 31,
	2021			2021

Trade accounts receivable	$	99,979		$	92,621
Other accounts receivable allowances		(6,311	)		(6,993	)
Allowance for doubtful accounts		(2,332	)		(2,338	)
Accounts receivable	$	91,336		$	83,290

Table of Contents

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance for the recognition of revenue from contracts with customers. Subsequent Accounting Standards Updates have been issued to provide clarity and defer the effective date of the new guidance. The new revenue recognition standard eliminates the transaction- and industry-specific revenue recognition guidance under current GAAP and replaces it with a principles-based approach. Our analysis to date has included reviewing material agreements and sales policies and procedures, interviewing sales and customer care management and analyzing those findings based on the five-step model described in the new standard. Additionally, we have decided to implement the standard using the modified retrospective adjustment method as a cumulative-effect adjustment as of the date of adoption. Implementation matters remaining include completing our analysis, assessing accounting policy elections and disclosures under the new guidance and evaluating the systems and processes to support any possible changes to our revenue recognition practices. Based on our analysis to date, we do not believe the standard will have a material effect on our financial statements. However, our analysis is not yet complete and this preliminary conclusion is subject to change. The new revenue recognition guidance is effective for us beginning in fiscal 2019, which begins on January 29, 2018.

2.	~~Acquisition~~

On September 29, 2017, we completed the previously announced acquisition (the “Acquisition”) of substantially all of the assets of SFI pursuant to the Asset Purchase Agreement the Company and SFI entered into on September 6, 2017 (the “Asset Purchase Agreement”). Upon completion and subject to post-closing working capital adjustments, the Company paid $32.7 million in cash (the “Cash Consideration”) and issued 176,018 shares of the Company’s common stock (the “Stock Consideration”) to the shareholders of SFI as consideration for the Acquisition. The Cash Consideration included an additional payment of approximately $650,000 pursuant to working capital adjustments provided for in the Asset Purchase Agreement. The number of shares of common stock issued at closing for the Stock Consideration was determined by reference to the mean closing price of the Company’s common stock for the ten trading days immediately preceding the business day preceding the closing date ($45.45). Under the Asset Purchase Agreement, we also assumed certain liabilities of SFI. The assumed liabilities did not include the indebtedness (as defined in the Asset Purchase Agreement) of SFI.

Also on September 29, 2017, we entered into a second amended and restated loan agreement (the “Loan Agreement”) with Bank of America, N.A. (“BofA”) in connection with the completion of the Acquisition. The Loan Agreement amends and restates the amended and restated loan agreement the Company entered into with BofA on February 1, 2016, in connection with its acquisition of the substantially all of the assets of Home Meridian International, Inc. The Amended and Restated Loan Agreement provides us with a new $12 million unsecured term loan (the “New Unsecured Term Loan”). On September 29, 2017, we borrowed the full $12 million available under the New Unsecured Term Loan in connection with the completion of the Acquisition. For additional details regarding the Loan Agreement, see Note 9. “Debt,” below.

In accordance with FASB Accounting Standards Codification Topic 805, “Business Combinations” (“ASC 805”), the Acquisition has been accounted for using the acquisition method of accounting. We recorded assets acquired, including identifiable intangible assets, and liabilities assumed, from SFI at their respective fair values at the date of completion of the Acquisition. The excess of the purchase price over the net fair value of such assets and liabilities was recorded as goodwill.

The following table summarizes the estimates of the fair values of the identifiable assets acquired and liabilities assumed in the Acquisition as of September 29, 2017. Inventory, prepaids and accounts payable values have been finalized. We are currently reviewing the net working capital adjustment as specified in the Asset Purchase Agreement, consequently, the accounts receivable, and accrued expenses values are subject to change. The preliminary estimates of fair value of property and equipment, intangible assets and goodwill are preliminary values, and subject to change as our appraisals and estimates are finalized during the fiscal 2018 fourth quarter.

4. Inventories

~~Table of Contents~~

Fair value estimates of assets acquired and liabilities assumed
Purchase price consideration
     Cash paid for assets acquired, including working capital adjustment $ 32,650
     Value of shares issued for assets acquired 8,000
     Fair value adjustment to shares issued for assets acquired* 396
Total purchase price $ 41,046

   Accounts receivable $ 3,576
   Inventory 2,380
   Prepaid expenses and other current assets 52
   Property and equipment 5,418
   Intangible assets 13,193
   Goodwill 17,645
   Accounts payable (699 )
   Accrued expenses (519 )
Total purchase price $ 41,046

*As provided by the Asset Purchase Agreement, we calculated the number of common shares issued to SFI by dividing $8 million by the mean closing price of our common stock for the ten trading days immediately preceding the business day immediately preceding the closing date ($45.45). However, U.S. Generally Accepted Accounting Standards provide that we value stock consideration exchanged in the Acquisition at fair value. Consequently, we adjusted the purchase price by $396,000, which represents the difference in the mean closing price of our common shares described in this paragraph and the price on September 29, 2017, multiplied by the number of common shares issued (176,018.) No additional consideration was transferred to SFI as a result of this adjustment.

Property and equipment were recorded at fair value and primarily consist of machinery and equipment and leasehold improvements. Property and equipment will be amortized over their estimated useful lives and leasehold improvements will be amortized over the lesser of their useful lives or the remaining lease period.

Goodwill is calculated as the excess of the purchase price over the net assets acquired. The goodwill recognized is attributable to growth opportunities and expected synergies. All goodwill in expected to be deductible for income tax purposes.

~~Intangible assets, consist of three separately identified assets:~~

§	Shenandoah customer relationships, which are definite-lived intangible assets with an aggregate fair value of $12.1 million. The customer relationships are amortizable and will be amortized over a period of thirteen years;

§	The Shenandoah tradename, an indefinite lived intangible asset with a fair value of $645,000. The tradename is not subject to amortization, but will be evaluated annually, and as circumstances dictate, for impairment; and

§	Shenandoah’s order backlog which is a definite-lived intangible asset with an aggregate fair value of $479,000 that we will amortize over four months, with most of the expense recognized in the fiscal 2018 fourth quarter.

~~The total weighted average amortization period for these assets is 12.5 years.~~

	May 2,			January 31,
	2021			2021
Finished furniture	$	90,591		$	81,290
Furniture in process		1,888			1,397
Materials and supplies		11,345			9,639
Inventories at FIFO		103,824			92,326
Reduction to LIFO basis		(22,349	)		(22,167	)
Inventories	$	81,475		$	70,159

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~~The following unaudited consolidated pro forma summary has been prepared by adjusting our historical data to give effect to the Acquisition as if it had occurred on February 1, 2016:~~

13 Weeks Ended 39 Weeks Ended
October 30, 2016 October 30, 2016
(Pro forma) (Pro forma)
Net Sales $ 156,570 $ 434,921
Net Income $ 7,268 $ 16,257
Basic EPS $ 0.63 $ 1.41
Diluted EPS $ 0.62 $ 1.39

Pro Forma - Unaudited
13 Weeks Ended 39 Weeks Ended
October 29, 2017 October 29, 2017
(Pro forma) (Pro forma)
Net Sales $ 165,777 $ 474,610
Net Income $ 9,218 $ 24,223
Basic EPS $ 0.79 $ 2.09
Diluted EPS $ 0.78 $ 2.06

The unaudited consolidated pro forma financial information was prepared in accordance with existing standards and is not necessarily indicative of the results of operations that would have occurred if the Acquisition had been completed on the date indicated, nor is it indicative of our future operating results.

Material adjustments included in the pro forma financial information in the table above consist of amortization of intangible assets, elimination of transaction related costs in fiscal 2018 proforma results and recording of interest on short and long-term debt incurred to facilitate this transaction.

The unaudited pro forma results do not reflect events that either have occurred or may occur after the Acquisition, including, but not limited to, the anticipated realization of savings from operating synergies in subsequent periods. They also do not give effect to certain charges that we expect to incur in connection with the Acquisition, including, but not limited to, additional professional fees, employee integration, retention, potential asset impairments and accelerated depreciation and amortization.

We have incurred approximately $700,000 in Acquisition-related costs so far in fiscal 2018. These expenses are included in the “Selling and administrative expenses” line of our condensed consolidated statements of income. Included in our fiscal 2018 third quarter and year-to-date results are Shenandoah’s October results, which include $3.1 million in net sales and $197,000 of operating income, including $290,000 in intangible amortization expense.

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~~3. Shareholders’ Equity~~

The number of shares and the amount of common stock outstanding changed materially from the end of the 2017 fiscal year, as a result of issuing 176,018 shares of common stock to the shareholders of SFI as partial consideration for the Acquisition. The table below reconciles the number of shares and amounts of common stock outstanding from our most recent fiscal year end to the end of the fiscal 2018 third quarter. The table shows the effects of the Acquisition issuance, as well as other activity in the common stock account unrelated to the Acquisition.

Common Stock
Shares Amount

Outstanding shares January 29, 2017 11,563 $ 39,753
Shares issued for Acquisition 176 8,396
Restricted share grants 23 431
Restricted stock compensation costs - 330
Outstanding shares October 29, 2017 11,762 $ 48,910

~~4. Accounts Receivable~~

October 29, January 29,
2017 2017

Trade accounts receivable $ 86,409 $ 99,378
Receivable from factor - 6
Other accounts receivable allowances (5,630 ) (6,298 )
Allowance for doubtful accounts (929 ) (508 )
Accounts receivable $ 79,850 $ 92,578

5.	~~Inventories~~

October 29, January 29,
2017 2017
Finished furniture $ 91,624 $ 85,520
Furniture in process 1,338 735
Materials and supplies 9,444 7,536
Inventories at FIFO 102,406 93,791
Reduction to LIFO basis (18,856 ) (18,488 )
Inventories $ 83,550 $ 75,303

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5.Property, Plant and Equipment

		Depreciable Lives	October 29,		January 29,		Depreciable Lives	May 2,		January 31,
		(In years)	2017		2017		(In years)	2021		2021

Buildings and land improvements		15 - 30	$	24,073	$	23,392	15 - 30	$	31,321	$	31,316
Computer software and hardware		3 - 10		18,181		17,308	3 - 10		15,152		15,012
Machinery and equipment		10		8,448		5,031	10		9,584		9,314
Leasehold improvements		Term of lease		9,470		7,104	Term of lease		10,022		10,005
Furniture and fixtures		3 - 8		2,181		1,903	3 - 10		2,667		2,614
Other		5		660		562	5		651		651
Total depreciable property at cost				63,013		55,300			69,397		68,912
Less accumulated depreciation				34,160		31,167			45,216		44,098
Total depreciable property, net				28,853		24,133			24,181		24,814
Land				1,067		1,067			1,077		1,077
Construction-in-progress				926		603			2,595		889
Property, plant and equipment, net	Property, plant and equipment, net		$	30,846	$	25,803		$	27,853	$	26,780

6. Fair Value Measurements

Fair value is the price that would be received ~~to sell~~upon the sale of an asset or paid toupon the transfer of a liability (an ~~“exit price”)~~exit price) in an orderly transaction between market participants on the applicable measurement date. We use a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

■

Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities;

~~Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities;~~

■

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

■

Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

~~Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and~~

~~Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.~~

As of ~~October 29, 2017~~May 2, 2021 and January ~~29, 2017,~~31, 2021, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs. The fair value of the Company-owned life insurance is determined by inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Additionally, the fair value of the Company-owned life insurance is marked to market each reporting period and any change in fair value is reflected in income for that period.

As of January 29, 2017, our Pension Plan (the “Plan”) assets were measured at fair value on a recurring basis based on Level 1 inputs. Pension plan assets, held in a trust account by the Plan’s trustee, primarily consist of a wide-range of mutual fund asset classes, including domestic and international equities, fixed income securities such as corporate bonds, mortgage-backed securities, real estate investments and U.S. Treasuries. As of January 31, 2017, the date of the latest actuarial valuation, Plan assets were netted against the Plan’s Projected Benefit Obligation (“PBO”) on that date to determine the Plan’s funded status. Since the PBO exceeded the market value of the Plan’s assets, the funded status is recorded in our condensed consolidated balance sheets as a net liability. As of January 31, 2017, the net liability for this plan was $3.5 million shown on the “Pension Plan” line of our condensed consolidated balance sheets. The market value of pension plan assets shown below are as of January 31, 2017, the actuarial valuation date of the Pension Plan. See Note 10. “Employee Benefit Plans” for additional information about the Plan.

~~Table of Contents~~

Our assets measured at fair value on a recurring basis at ~~October 29, 2017~~May 2, 2021 and January ~~29, 2017,~~31, 2021, were as follows:

	Fair value at October 29, 2017								Fair value at January 29, 2017								Fair value at May 2, 2021								Fair value at January 31, 2021
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
																	(In thousands)
Assets measured at fair value
Company-owned life insurance	$	-	$	23,322	$	-	$	23,322	$	-	$	22,366	$	-	$	22,366	$	0	$	25,935	$	0	$	25,935	$	0	$	25,365	$	0	$	25,365
Pension plan assets*		13,881		-		-		13,881		13,881		-		-		13,881

* as

Table of ~~January 29, 2017 for Pension Plan assets.~~Contents

7.Intangible Assets

		January 31, 2021					May 2, 2021
Non-amortizable Intangible Assets	Segment	Beginning Balance		��	Impairment Charges		Net Book Value
Goodwill	Domestic Upholstery	$	490		$	0	$	490

Trademarks and trade names - Home Meridian	Home Meridian		6,650			0		6,650
Trademarks and trade names - Bradington-Young	Domestic Upholstery		861			0		861
Trademarks and trade names - Sam Moore	Domestic Upholstery		396			0		396
Total Trademarks and trade names		$	7,907		$	0	$	7,907

Total non-amortizable assets		$	8,397		$	0	$	8,397

During the fiscal 2018 third quarter, we recorded both non-amortizable and amortizable intangible assets as a result of the Acquisition. Shenandoah’s trade names, customer relationships and order backlog have been assigned preliminary fair values subject to additional analysis during the measurement period as we continue to gather information. Details of these new intangible assets, as well as previously recorded intangible assets assigned to our Upholstery and Home Meridian reportable segments, are as follows:

October 29, January 29,
Segment 2017 2017
Non-amortizable Intangible Assets
Goodwill Home Meridian $ 23,187 $ 23,187
Goodwill Upholstery $ 17,645 -
Trademarks and trade names - Home Meridian Home Meridian 11,400 11,400
Trademarks and trade names - Bradington-Young Upholstery 861 861
Trademarks and trade names - Shenandoah Upholstery 645 -
Trademarks and trade names - Sam Moore Upholstery 396 396
Total non-amortizable assets $ 54,134 $ 35,844

Our amortizable intangible assets ~~consist of customer relationships, trademarks and order backlog and~~ are recorded in ~~the~~our Home Meridian and Domestic Upholstery segments. The ~~estimated~~carrying amounts and changes therein of those amortizable intangible assets were as follows:

	Amortizable Intangible Assets
	Customer
	Relationships			Trademarks			Totals

Balance at January 31, 2021	$	17,672		$	658		$	18,330
Amortization		(581	)		(15	)		(596	)
Balance at May 2, 2021	$	17,091		$	643		$	17,734

For the remainder of fiscal 2022, amortization expense ~~associated with these assets~~ is expected to be approximately $1.8 million.

8. Leases

In fiscal 2020, we adopted Accounting Standards Codification Topic 842 Leases. We recognized $146,000 sub-lease income for the three-month period ended May 2, 2021. The components of lease cost and supplemental cash flow information for leases for the three-months ended May 2, 2021 were:

	Thirteen Weeks Ended
	May 2, 2021		May 3, 2020
Operating lease cost	$	2,013	$	2,100
Variable lease cost		44		46
Short-term lease cost		19		116
Total operating lease cost	$	2,076	$	2,262


Operating cash outflows	$	1,992	$	1,852

The right-of-use assets and lease liabilities recorded on our Condensed Consolidated Balance Sheets as of May 2, 2021 and January 31, 2021 were as follows:

Fiscal Year Amount

Remainder of 2018 $ 833
2019 2,263
2020 2,263
2021 2,263
2022 2,263
Thereafter 14,640
$ 24,525

	May 2, 2021		January 31, 2021
Real estate	$	31,918	$	33,651
Property and equipment		882		962
Total operating leases right-of-use assets	$	32,800	$	34,613


Current portion of operating lease liabilities	$	6,381	$	6,650
Long term operating lease liabilities		27,980		29,441
Total operating lease liabilities	$	34,361	$	36,091

~~Accumulated amortization on intangible assets was $4.4 million at October 29, 2017 and was $3.1 million at January 29, 2017.~~

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~~9. Debt~~

The weighted-average remaining lease term is 6.6 years. We used our incremental borrowing rate which is LIBOR plus 1.5% at the adoption date. The weighted-average discount rate is 2.2%.

The following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in the condensed consolidated balance sheets on May 2, 2021:

~~On September 29, 2017,~~

	Undiscounted Future Operating Lease Payments
Remainder of 2022	$	5,436
2023		5,593
2024		5,665
2025		5,281
2026		5,336
2027 and thereafter		9,809
Total lease payments	$	37,120
Less: impact of discounting		(2,759	)
Present value of lease payments	$	34,361

Due to the COVID-19 pandemic, we ~~entered into a loan agreement (the “Loan Agreement”) with Bank~~received concessions on several of ~~America, N.A. (“BofA”)~~our leases, including changes in ~~connection with~~lease terms and deferred rent payments. We accounted for the ~~completion~~concessions as lease modifications. None of the ~~Acquisition discussed in Note~~modifications had a material effect on our condensed consolidated financial statements or results of operations. As of May 2, ~~Acquisition, above. The Loan Agreement amends and restates the amended and restated loan agreement that~~2021, the Company ~~entered into~~had an additional lease for a warehouse in Georgia that had not yet commenced with ~~BofA on February 1, 2016. The Loan Agreement provides us with the New Unsecured Term Loan of $12 million.~~

9.Long-Term Debt

As of ~~September 30, 2022 or the expiration of the Company’s existing $30~~May 2, 2021, we had an aggregate $28.7 million available under our $35 million revolving credit facility (the “Existing Revolver”), at which time all amounts outstanding under the New Unsecured Term Loan will become due and payable. We may prepay the outstanding principal amount under the New Unsecured Term Loan, in full or in part, on any interest payment date without penalty. On September 29, 2017, we borrowed the full $12 million available under the New Unsecured Term Loan.

Additionally, we incurred $39,000 in debt issuance costs in connection with our term loans in the fiscal 2018 third quarter. These costs are amortized over the life of the loan using the interest method and are included in the “interest expense” line of our condensed consolidated income statements. Unamortized debt issuance costs are netted against the carrying value of our term loans on our condensed consolidated balance sheets. As of October 29, 2017, including the debt issuance costs in connection with a previous acquisition, total unamortized loan costs of $131,000 were netted against the carrying value of our term loans on our condensed consolidated balance sheets.

~~The Loan Agreement also included customary representations and warranties and requires us to comply with customary covenants, including, among other things, the following financial covenants:~~

·	~~Maintain a ratio of funded debt to EBITDA not exceeding:~~

o	~~2.50:1.0 through August 31, 2018;~~

o	~~2.25:1.0 through August 31, 2019; and~~

o	~~2.00:1.00 thereafter.~~

·	~~A basic fixed charge coverage ratio of at least 1.25:1.00; and~~

·	Limit capital expenditures to no more than $15.0 million during any fiscal year with expenditures to acquire fixed assets pursuant to the Acquisition being excluded for the fiscal year in which the Acquisition occurs.

The Loan Agreement also limits our right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions. The Loan Agreement does not restrict our ability to pay cash dividends on, or repurchase, shares of our common stock, subject to our compliance with the financial covenants discussed above, if we are not otherwise in default under the Loan Agreement.

~~We were in compliance with each of these financial covenants at October 29, 2017 and expect to remain in compliance with existing covenants through fiscal 2018 and for the foreseeable future.~~

~~As of October 29, 2017, we had an aggregate $28.5 million available under our Existing Revolver~~ to fund working capital needs. Standby letters of credit in the aggregate amount of ~~$1.5~~$6.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the ~~Existing Revolver~~revolving credit facility as of ~~October 29, 2017.~~May 2, 2021. There were no additional borrowings outstanding under the Existing Revolver ~~on October 29, 2017.~~

~~Table of Contents~~

~~10. Employee Benefit Plans~~

We maintain three retirement plans for the benefit of certain former and current employees, including a supplemental retirement income plan (“SRIP”) for certain former and current employees of Hooker Furniture Corporation, as well as two plans for the benefit of certain and former employees of Pulaski Furniture Corporation, one of two entities combined to form Home Meridian International. These legacy pension plan obligations include:

§	the Pulaski Furniture Corporation Supplemental Executive Retirement Plan (“SERP”) for certain former executives. The SERP is an unfunded plan and all benefits are paid solely out of our general assets; and

§	~~the Pulaski Furniture Corporation Pension Plan (“Pension Plan”) for former Pulaski Furniture Corporation employees.~~

The SRIP, SERP and Pension Plan are all “frozen” and we do not expect to add additional employees to any of these plans in the future. Pension plan assets include a range of mutual fund asset classes and are measured at fair value using Level 1 inputs, which are quoted prices in active markets.

~~Components of net periodic benefit cost for the SRIP, SERP and Pension Plans are included in our condensed consolidated statements of income under selling and administrative expenses.~~

Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, October 30, October 29, October 30,
2017 2016 2017 2016
Net periodic benefit costs
      Service cost 76 94 228 282
      Interest cost 280 295 839 885
      Actuarial loss (gain) 15 (18 ) 45 (54 )
      Expected return on pension plan assets (234 ) (197 ) (700 ) (591 )
      Expected administrative expenses 70 70 210 210

Consolidated net periodic benefit costs $ 207 $ 244 $ 622 $ 732

~~The expected long-term rate of return on Pension Plan assets is 7.0%~~ as of the Pension Plan’s most recent valuation date of January 29, 2017. We contributed $511,000 in required contributions to the Pension Plan in the first nine months of fiscal 2018. There are no required Pension Plan contributions due during the remainder of fiscal 2018. The SRIP and SERP plans are unfunded plans. Consequently, we expect to pay a total of approximately $210,000 in benefit payments from our general assets during the remainder of fiscal 2018 to fund SRIP and SERP payments.May 2, 2021.

~~11.~~

10.Earnings Per Share

We refer you to the discussion of Earnings Per Share in Note ~~1 “Summary~~2. Summary of Significant Accounting Policies,” in the financial statements included in our ~~2017~~2021 Annual Report, for additional information concerning the calculation of earnings per share.

All stock awards are designed to encourage retention and to provide an incentive for increasing shareholder value. We have issued restricted stock awards to non-employee members of the board of directors since 2006 and to certain non-executive employees since 2014. We have issued restricted stock units (“RSUs”) to certain senior executives since fiscal 2012 under the Company’s Stock Incentive Plan. Each RSU entitles an executive to receive one share of the Company’s common stock if the executive remains continuously employed with the Company through the end of a three-year service period. The RSUs may be paid in shares of our common stock, cash or both at the discretion of the Compensation Committee of our board of directors. We have issued Performance-based Restricted Stock Units (“PSUs”) to certain senior executives since fiscal 2019 under the Company’s Stock Incentive Plan. Each PSU entitles the executive officer to receive one share of our common stock based on the achievement of two specified performance conditions if the executive officer remains continuously employed through the end of the three-year performance period. One target is based on our annual average growth in our EPS over the performance period and the other target is based on EPS growth over the performance period compared to our peers. The payout or settlement of the PSUs will be made in shares of our common stock.

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We expect to continue to grant these types of awards annually in the future. The following table sets forth the number of outstanding restricted stock awards and RSUs and PSUs, net of forfeitures and vested shares, as of the fiscal period-end dates indicated:

October 29, January 29,
2017 2017

Restricted shares 16 26
Restricted stock units 19 20
35 46

	May 2,		January 31,
	2021		2021

Restricted shares		75		55
RSUs and PSUs		151		141
		226		196

~~Table of Contents~~

All restricted shares, RSUs and ~~RSUs~~PSUs awarded that have not yet vested are considered when computing diluted earnings per share. The following table sets forth the computation of basic and diluted earnings per share:

Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, October 30, October 29, October 30,
2017 2016 2017 2016

Net income $ 7,202 $ 6,459 $ 19,726 $ 14,308
   Less: Unvested participating restricted stock dividends 2 3 8 8
            Net earnings allocated to unvested participating restricted stock 10 14 37 32
Earnings available for common shareholders 7,190 6,442 19,681 14,268

Weighted average shares outstanding for basic earnings per share 11,679 11,537 11,596 11,528
Dilutive effect of unvested restricted stock and RSU awards 21 22 30 28
   Weighted average shares outstanding for diluted earnings per share 11,700 11,559 11,626 11,556

Basic earnings per share $ 0.62 $ 0.56 $ 1.70 $ 1.24

Diluted earnings per share $ 0.61 $ 0.56 $ 1.69 $ 1.23

	Thirteen Weeks Ended
	May 2,		May 3,
	2021		2020

Net income/(loss)	$	9,443	$	(34,819	)
Less: Unvested participating restricted stock dividends		11		8
Net earnings allocated to unvested participating restricted stock		49		0
Earnings/(loss) available for common shareholders		9,383		(34,827	)

Weighted average shares outstanding for basic earnings per share		11,833		11,798
Dilutive effect of unvested restricted stock, RSU and PSU awards		139		0
Weighted average shares outstanding for diluted earnings per share		11,972		11,798

Basic earnings/(loss) per share	$	0.79	$	(2.95	)

Diluted earnings/(loss) per share	$	0.78	$	(2.95	)

~~12.~~

11. Income Taxes

We recorded income tax expense of $4$2.8 million for the fiscal ~~2018 third~~2022 first quarter, compared to ~~$3.5~~income tax benefit of $10.9 million for the comparable prior year ~~period.~~period, of which $10.6 million was recorded related to goodwill and trade name impairment charges. The effective tax rates for the fiscal ~~2018~~2022 and ~~2017 third quarter~~2021 first quarters were ~~35.7%~~22.7% and ~~34.8%~~23.8%, respectively. ~~Our effective tax rate was higher in the fiscal 2018 third quarter primarily due to higher state tax expenses as the result of expanding territory.~~

No material and ~~2017 were 34.9% and 35.1%, respectively. The effective tax rate was lower in the 2018 first nine months due to the settlement of an~~non-routine positions have been identified that are uncertain tax ~~position on captive insurance, excess tax benefits from share-based compensation and a state tax credit received during the first quarter of fiscal 2018.~~positions.

~~The net unrecognized tax benefits as of October 29, 2017 and January 29, 2017, which, if recognized, would affect our effective tax rate are $129,000 and $201,000, respectively.~~

Tax years ending ~~February 2, 2014~~January 28, 2018 through January ~~29, 2017~~31, 2021 remain subject to examination by federal and state taxing authorities.

~~13.~~

12. Segment Information

As a public entity, we are required to present disaggregated information by segment using the management approach. The objective of this approach is to allow users of our financial statements to see our business through the eyes of management based upon the way management reviews performance and makes decisions. The management approach requires segment information to be reported based on how management internally evaluates the operating performance of the company’s business units or segments. The objective of this approach is to meet the basic principles of segment reporting as outlined in ~~Accounting Standards Codification Topic~~ASC 280 ~~“Segment Reporting” (“~~Segments (“ASC 280”), which are to allow the users of our financial statements to:

■

better understand our performance;

■

better assess our prospects for future net cash flows; and

■

make more informed judgments about us as a whole.

Table of Contents

We define our segments as those operations our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources. We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating income, as determined by the information regularly reviewed by the CODM.

We continually monitor our reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. For financial reporting purposes, we are organized into ~~four~~3 reportable ~~segments:~~segments and “All Other”, which includes the remainder of our businesses:

■

Hooker ~~Casegoods~~Branded, ~~an imported casegoods business;~~

§	~~Upholstery, which includes~~consisting of the ~~domestic upholstery manufacturing~~ operations of ~~Bradington-Young, Sam Moore, Shenandoah Furniture~~our imported Hooker Casegoods and ~~the imported upholstery operations of~~ Hooker ~~Upholstery;~~ Upholstery businesses;

■

Home Meridian, a business acquired at the beginning of fiscal 2017, is a stand-alone, mostly autonomous business that serves a different type or class of customer than do our other operating segments and at much lower margins; ~~and~~

~~All other~~,

■

Domestic Upholstery, which includes the domestic upholstery manufacturing operations of Bradington-Young, Sam Moore and Shenandoah Furniture; and

■

All Other, consisting of H Contract and ~~Homeware, two businesses~~Lifestyle Brands, a new business started in ~~2013.~~late fiscal 2019. Neither of these operating segments ~~met the ASC 280 aggregation criteria nor~~ were individually reportable; therefore, we combined them in an “All ~~other” segment~~Other” in accordance with ASC 280. ~~We note that Homeware failed to reach critical mass and its operations were wound down during the fiscal 2018 second quarter.~~

~~Table of Contents~~

The following table presents segment information for the periods, and as of the dates, ~~indicated:~~indicated.

Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, October 30 October 29, October 30
2017 2016 2017 2016
% Net % Net % Net % Net
Net Sales Sales Sales Sales Sales
   Hooker Casegoods $ 36,373 23.0 % $ 36,861 25.4 % $ 104,067 23.4 % $ 103,372 25.6 %
   Upholstery 26,701 16.9 % 19,664 13.5 % 71,247 16.0 % 61,404 15.2 %
   Home Meridian 92,068 58.3 % 86,053 59.2 % 262,173 58.9 % 231,391 57.4 %
   All other 2,792 1.8 % 2,720 1.9 % 7,627 1.7 % 7,125 1.8 %
   Intercompany eliminations - - - -
Consolidated $ 157,934 100.0 % $ 145,298 100 % $ 445,114 100.0 % $ 403,292 100 %

Gross Profit
   Hooker Casegoods $ 11,346 31.2 % $ 12,081 32.8 % $ 32,984 �� 31.7 % $ 32,897 31.8 %
   Upholstery 6,190 23.2 % 4,311 21.9 % 17,255 24.2 % 14,029 22.8 %
   Home Meridian 15,808 17.2 % 13,742 16.0 % 42,875 16.4 % 36,865 15.9 %
   All other 934 33.4 % 791 29.1 % 2,420 31.7 % 2,204 30.9 %
   Intercompany eliminations - 1 4 8
Consolidated $ 34,278 21.7 % $ 30,926 21.3 % $ 95,538 21.5 % $ 86,003 21.3 %

Operating Income
   Hooker Casegoods $ 3,990 11.0 % $ 5,092 13.8 % $ 11,918 11.5 % $ 11,514 11.1 %
   Upholstery 2,199 8.2 % 1,178 6.0 % 6,807 9.6 % 4,256 6.9 %
   Home Meridian 4,607 5.0 % 3,503 4.1 % 10,658 4.1 % 5,956 2.6 %
   All other 409 14.6 % 165 6.1 % 721 9.5 % 430 6.0 %
   Intercompany eliminations - 1 4 8
Consolidated $ 11,205 7.1 % $ 9,939 6.8 % $ 30,108 6.8 % $ 22,164 5.5 %

Capital Expenditures
   Hooker Casegoods $ 268 $ 343 $ 1,259 $ 1,065
   Upholstery 145 430 359 638
   Home Meridian 580 122 1,090 193
   All other - 9 - 9
Consolidated $ 993 $ 904 $ 2,708 $ 1,905

Depreciation & Amortization
   Hooker Casegoods $ 490 $ 566 $ 1,452 $ 1,650
   Upholstery 538 253 929 718
   Home Meridian 673 770 2,012 3,965
   All other 1 3 6 7
Consolidated $ 1,702 $ 1,592 $ 4,399 $ 6,340

	Thirteen Weeks Ended
	May 2, 2021					May 3, 2020
			% Net						% Net
Net Sales			Sales						Sales
Hooker Branded	$	51,339		31.5	%	$	27,162			26.0	%
Home Meridian		84,411		51.8	%		57,665			55.1	%
Domestic Upholstery		24,492		15.1	%		16,783			16.0	%
All Other		2,619		1.6	%		2,987			2.9	%
Consolidated	$	162,861		100	%	$	104,597			100.0	%

Gross Profit
Hooker Branded	$	17,212		33.5	%	$	8,005			29.5	%
Home Meridian		10,135		12.0	%		6,809			11.8	%
Domestic Upholstery		5,355		21.9	%		2,783			16.6	%
All Other		880		33.6	%		1,056			35.4	%
Consolidated	$	33,582		20.6	%	$	18,653			17.8	%

Operating Income/(Loss)
Hooker Branded	$	9,442		18.4	%	$	1,333			4.9	%
Home Meridian		866		1.0	%		(30,348	)		-52.6	%
Domestic Upholstery		1,688		6.9	%		(16,810	)		-100.2	%
All Other		247		9.4	%		387			12.9	%
Consolidated	$	12,243		7.5	%	$	(45,438	)		-43.4	%

Capital Expenditures
Hooker Branded	$	83				$	53
Home Meridian		1,346					89
Domestic Upholstery		759					238
All Other		0					0
Consolidated	$	2,188				$	380

Depreciation & Amortization
Hooker Branded	$	449				$	455
Home Meridian		501					528
Domestic Upholstery		761					699
All Other		3					3
Consolidated	$	1,714				$	1,685

As of
October 29,
2017
%Total
As of
January 29,
2017
%Total
Assets Assets Assets
   Hooker Casegoods $ 125,232 47.5 % $ 130,917 48.6 %
   Upholstery 42,636 16.2 % 31,018 11.5 %
   Home Meridian 95,483 36.2 % 107,101 39.7 %
   All other 509 0.2 % 554 0.2 %
   Intercompany eliminations - 0.0 % (4 ) 0.0 %
Consolidated assets $ 263,860 100.0 % $ 269,586 100 %
Consolidated goodwill and intangibles 78,657 49,110
Total consolidated assets $ 342,517 $ 318,696

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	As of May 2,					As of January 31,
	2021		%Total			2021		%Total
Identifiable Assets			Assets					Assets
Hooker Branded	$	170,115		49.8	%	$	174,475		53.5	%
Home Meridian		119,737		35.1	%		100,497		30.9	%
Domestic Upholstery		50,794		14.9	%		49,370		15.2	%
All Other		538		0.2	%		1,204		0.4	%
Consolidated	$	341,184		100	%	$	325,546		100	%
Consolidated Goodwill and Intangibles		26,131					26,727
Total Consolidated Assets	$	367,315				$	352,273

Sales by product type are as follows:

	Net Sales (in thousands)
	Thirteen Weeks Ended										Thirty-Nine Weeks Ended										Net Sales (in thousands)
	October 29,					October 30,					October 29,					October 30,					Thirteen Weeks Ended
	2017		%Total			2016		%Total			2017		%Total			2016		%Total			May 2, 2021		%Total			May 3, 2020		%Total
Casegoods	$	115,106		73	%	$	107,994		74	%	$	316,639		71	%	$	286,039		71	%	$	97,959		60	%	$	63,602		61	%
Upholstery		42,828		27	%		37,304		26	%		128,475		29	%		117,253		29	%		64,902		40	%		40,995		39	%
	$	157,934		100	%	$	145,298		100	%	$	445,114		100	%	$	403,292		100	%	$	162,861		100	%	$	104,597		100	%

~~14. Related Party Transactions~~

We lease the four properties utilized in Shenandoah’s operations. One of our employees has an ownership interest in the entities that own these properties. The leases commenced on September 29, 2017, have an initial 48-month term, and an option to renew each for an additional seven years. All four leases include annual rent escalation clauses with respect to minimum lease payments after the initial 48-month term of the lease is completed. In addition to monthly lease payments, we also incur expenses for property taxes, routine repairs and maintenance and other operating expenses. We paid $68,000 in lease payments to these entities during the fiscal 2018 third quarter.

~~15.~~

13. Subsequent Events

Dividends

~~Dividends~~

On ~~December 7, 2017,~~June 3, 2021, our board of directors declared a quarterly cash dividend of ~~$0.14~~$0.18 per share, ~~payable~~which will be paid on ~~December 29, 2017~~June 30, 2021 to shareholders of record at ~~December 18, 2017.~~June 16, 2021.

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Item 2.~~Management’s~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

All references to the ~~“Company,~~“Company,” ~~“we,~~“we,” ~~“us”~~“us” and ~~“our”~~“our” in this document refer to Hooker Furniture Corporation and its consolidated subsidiaries, unless specifically referring to ~~operating~~ segment information. All references to the “Hooker”, “Hooker Division” or “traditional Hooker” divisions or companies refer to the current components of our Hooker Casegoods and Upholstery operating segments, including Shenandoah since its characteristics (e.g. management, price points, margins and domestic manufacturing base), are like that of the other components of what we previously defined as the “legacy Hooker” business. References to the “Acquisition” refer to the recently completed acquisition of substantially all of the assets of Shenandoah Furniture, Inc. on September 29, 2017. All references to specific quarterly periods are referring to our fiscal quarters. Our quarterly periods are based on thirteen-week “reporting periods” (which end on a Sunday) rather than quarterly periods consisting of three calendar months. As a result, each quarterly period generally is thirteen weeks, or 91 days, long, except as noted below. All references to the years 2018, 2017 and other years are referring to our fiscal years, unless otherwise stated. Our fiscal years end on the Sunday closest to January 31. In some years (generally once every six years) the fourth quarter will be fourteen weeks long and the fiscal year will consist of fifty-three weeks.

Forward-Looking Statements

Certain statements made in this report, including statements ~~included~~ under Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the notes to the consolidated financial statements included in this report, are not based on historical facts, but are forward-looking statements. These statements reflect our reasonable judgment with respect to future events and typically can be identified by the use of forward-looking terminology such as “believes,” “expects,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “would,” “could” or “anticipates,” or the ~~negative~~negatives thereof, or other variations ~~thereon,~~thereof, or comparable terminology, or by discussions of strategy. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Those risks and uncertainties include but are not limited to:

■

disruptions involving our vendors or the transportation and handling industries, particularly those affecting imported products from Vietnam and China, including customs issues, labor stoppages, strikes or slowdowns and the availability of shipping containers and cargo ships;

■

the effect and consequences of the coronavirus (COVID-19) pandemic or future pandemics on a wide range of matters including but not limited to U.S. and local economies; our business operations and continuity; the health and productivity of our employees; and the impact on our global supply chain, the retail environment and our customer base;

■

general economic or business conditions, both domestically and internationally, and instability in the financial and credit markets, including their potential impact on our (i) sales and operating costs and access to financing or (ii) customers and suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses;

the risks related to the recent Acquisition including integration costs, costs related to Acquisition debt, maintaining Shenandoah’s existing customer relationships, debt service costs, interest rate volatility, the use of operating cash flows to service debt to the detriment of other corporate initiatives or strategic opportunities, financial statement charges related to the application of current accounting guidance in accounting for the Acquisition, the recognition of significant additional depreciation and amortization expenses by the combined entity, the loss of key employees from Shenandoah, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies across the companies which could adversely affect our internal control or information systems and the costs of bringing them into compliance ~~and~~ ~~failure to realize benefits anticipated from the Acquisition;~~

§ ■	~~the risks specifically related to the concentrations of a material part of our sales and accounts receivable in only a few customers;~~

§	achieving and managing growth and change, and the risks associated with new business lines, acquisitions (including the recent Acquisition), restructurings, strategic alliances and international operations;

§	~~risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods and transportation and warehousing costs;~~

adverse political acts or developments in, or affecting, the international markets from which we import products, including duties or tariffs imposed on those products by foreign governments or the U.S. government, such as the prior U.S. administration’s imposition of a 25% tariff on certain goods imported into the United States from China including almost all furniture and furniture components manufactured in China, which is still in effect, with the potential for additional or increased tariffs in the future;

■

sourcing transitions away from China, including the ~~implementation~~lack of ~~a possible border-adjustment tax;~~adequate manufacturing capacity and skilled labor and longer lead times, due to competition and increased demand for resources in those countries;

■

risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods, ocean freight costs and warehousing costs and the risk that a disruption in our offshore suppliers could adversely affect our ability to ~~successfully implement our business plan to increase sales and improve financial performance;~~timely fill customer orders;

■

changes in ~~actuarial assumptions,~~U.S. and foreign government regulations and in the ~~interest rate environment,~~political, social and economic climates of the ~~return on plan assets~~countries from which we source our products;

■

difficulties in forecasting demand for our imported products;

■

risks associated with product defects, including higher than expected costs associated with product quality and ~~future funding obligations~~safety, and regulatory compliance costs related to the ~~Pension Plan, which can affect future funding obligations,~~sale of consumer products and costs related to defective or non-compliant products, including product liability claims and ~~plan liabilities;~~costs to recall defective products;

■

disruptions and damage (including those due to weather) affecting our Virginia, North Carolina or California warehouses (and our new Georgia warehouse when occupied), our Virginia or North Carolina administrative facilities or our representative offices or warehouses in Vietnam and China;

■

risks associated with our newly leased warehouse space in Georgia, including delays in construction and occupancy and risks associated with our move to the facility, including information systems, access to warehouse labor and the inability to realize anticipated cost savings;

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■

risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the ~~possible impairment~~prices and availability of key raw materials, as well as changes in transportation, warehousing and domestic labor costs, availability of skilled labor, and environmental compliance and remediation costs;

■

the risks specifically related to the concentrations of a material part of our ~~long-lived assets, which can result~~sales and accounts receivable in ~~reduced earnings and net worth;~~

§	only a few customers, including the ~~cost and difficulty~~loss of ~~marketing and selling our products in foreign markets;~~

~~disruptions involving our vendors~~several large customers through business consolidations, failures or other reasons, or the ~~transportation and handling industries, particularly those affecting imported products from Vietnam and China, including customs issues, labor stoppages, strikes~~loss of significant sales programs with major customers;

■

our inability to collect amounts owed to us or ~~slowdowns and the availability of shipping containers and cargo ships;~~significant delays in collecting such amounts;

■

the interruption, inadequacy, security breaches or integration failure of our information systems or information technology infrastructure, related service providers or the ~~internet;~~internet or other related issues including unauthorized disclosures of confidential information or inadequate levels of cyber-insurance or risks not covered by cyber insurance;

■

the direct and indirect costs and time spent by our associates associated with the implementation of our Enterprise Resource Planning system, including costs resulting from unanticipated disruptions ~~affecting~~to our ~~Virginia, North Carolina or~~ ~~California warehouses, our Virginia or North Carolina administrative facilities or our representative offices in Vietnam and China;~~business;

~~when or whether our~~

■

achieving and managing growth and change, and the risks associated with new business ~~initiatives, including the recent Acquisition~~lines, acquisitions, restructurings, strategic alliances and ~~the acquisition of Home Meridian, meet growth and profitability targets;~~international operations;

~~price competition~~

■

the impairment of our long-lived assets, which can result in ~~the furniture industry;~~reduced earnings and net worth;

■

capital requirements and costs;

■

risks associated with distribution through third-party retailers, such as non-binding dealership arrangements;

■

the cost and difficulty of marketing and selling our products in foreign markets;

■

changes in domestic and international monetary policies and fluctuations in foreign currency exchange rates affecting the price of our imported products and raw materials;

■

the cyclical nature of the furniture industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers’ income available for discretionary purchases, and the availability and terms of consumer credit;

~~risks associated with domestic manufacturing operations, including fluctuations~~

■

price competition in ~~capacity utilization and~~ the ~~prices and availability of key raw materials, as well as changes in transportation, warehousing and domestic labor costs and environmental compliance and remediation costs;~~furniture industry;

§	~~risks associated with distribution through third-party retailers, such as non-binding dealership arrangements;~~

§ ■	~~capital requirements and costs, including the servicing of our floating-rate term loans;~~

§	competition from non-traditional outlets, such as internet and catalog retailers; and ~~internet retailers and home improvement centers;~~

■

changes in consumer preferences, including increased demand for lower-quality, lower-priced ~~furniture due to, among other things, declines in consumer confidence, amounts of discretionary income available for furniture purchases and the availability of consumer credit;~~furniture.

§	higher than expected costs associated with product quality and safety, including regulatory compliance costs related to the sale of consumer products and costs related to defective or non-compliant products; and

§	~~higher than expected employee medical and workers’ compensation costs that may increase the cost of our self-insured healthcare and workers’ compensation plans.~~

Our forward-looking statements could be wrong in light of these and other risks, uncertainties and assumptions. The future events, developments or results described in this report could turn out to be materially different. Any forward-looking statement we make speaks only as of the date of that statement, and we undertake no obligation, except as required by law, to update any forward-looking statements whether as a result of new information, future events or otherwise and you should not expect us to do so.

~~Our~~

Also, our business is subject to a number of significant risks and uncertainties any of which can adversely affect our business, results of operations, financial condition or future prospects. For a discussion of risks and uncertainties that we face, see the ~~Forward Looking~~Forward-Looking Statements detailed above and Item 1A, “Risk Factors” in our ~~2017~~2021 annual report on Form 10-K (the ~~“2017~~“2021 Annual Report”)~~, and Item 1A of Part II of this quarterly report on Form 10-Q.~~.

Investors should also be aware that while we occasionally communicate with securities analysts and others, it is against our policy to selectively disclose to them any material nonpublic information or other confidential commercial information. Accordingly, investors should not assume that we agree with any projection, forecast or report issued by any analyst regardless of the content of the statement or report, as we have a policy against confirming information issued by others.

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This quarterly report on Form 10-Q includes our unaudited condensed consolidated financial statements for the thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” ~~“third~~“first quarter” or “quarterly period”) that began ~~July 31, 2017,~~February 1, 2021 and ~~the thirty-nine week period (also referred to as “nine months,” or “nine-month period”) that began January 30, 2017, which both~~ ended ~~October 29, 2017.~~May 2, 2021. This report discusses our results of operations for this period compared to the ~~2017~~2021 fiscal year thirteen-week period that began ~~August 1, 2016~~February 3, 2020 and ~~the thirty-nine week period that began February 1, 2016, which both~~ ended ~~October 30, 2016;~~May 3, 2020; and our financial condition as of ~~October 29, 2017~~May 2, 2021 compared to January ~~29, 2017.~~31, 2021.

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References in this report to:

■

the ~~2018 fiscal year and comparable terminology mean the fiscal year that began January 30, 2017 and will end January 28, 2018; and~~

§	~~the 2017~~2022 fiscal year and comparable terminology mean the fiscal year that began February 1, ~~2016~~2021 and will end January 30, 2022; and

■

the 2021 fiscal year and comparable terminology mean the fiscal year that began February 3, 2020 and ended January ~~29, 2017.~~31, 2021.

Dollar amounts presented in the tables below are in thousands except for per share data.

In the discussion below and herein we reference changes in sales orders or “orders” and sales order backlog (unshipped orders at a point in time) or “backlog” over and compared to certain periods of time and changes discussed are in sales dollars and not units of inventory, unless stated otherwise. We believe orders are generally good current indicators of sales momentum and business conditions. However, except for custom or proprietary products, orders may be cancelled before shipment. If the items ordered are in stock and the customer has requested immediate delivery, we generally ship products in about seven days or less from receipt of order; however, orders may be shipped later if they are out of stock or there are production or shipping delays or the customer has requested the order to be shipped at a later date. For the Hooker Branded and Domestic Upholstery segments and All Other, we generally consider unshipped order backlogs to be one helpful indicator of sales for the upcoming 30-day period, but because of our relatively quick delivery and our cancellation policies, we do not consider order backlogs to be a reliable indicator of expected long-term sales. We generally consider the Home Meridian segment’s backlog to be one helpful indicator of that segment’s sales for the upcoming 90-day period. Due to (i) Home Meridian’s sales volume, (ii) the average sales order sizes of its mass, club and mega account channels of distribution, (iii) the proprietary nature of many of its products and (iv) the project nature of its hospitality business, for which average order sizes tend to be larger and consequently, its order backlog tends to be larger. There are exceptions to the general predictive nature of our orders and backlogs noted in this paragraph due to current demand and supply chain challenges related to the COVID-19 pandemic. They are discussed in greater detail below and are essential to understanding our prospects.

At May 2, 2021, our backlog of unshipped orders was as follows:

	Order Backlog
	(Dollars in 000s)

	May 2, 2021		January 31, 2021		May 3, 2020
Reporting Entity	Dollars		Dollars		Dollars

Hooker Branded	$	41,007	$	34,776	$	12,392
Home Meridian		191,767		180,188		63,831
Domestic Upholstery		43,985		30,271		12,720
All Other		3,704		2,845		2,656

Consolidated	$	280,463	$	248,080	$	91,599

At the end of fiscal 2022 first quarter, order backlog had increased $32.4 million or 13% as compared to the end of fiscal 2021 and increased $188.9 million or 206% as compared to the prior-year first quarter end, due to increased incoming orders in all three reportable segments as well as the supply chain disruptions in the Home Meridian and, to a lesser degree, Hooker Branded segments and production delays in the Domestic Upholstery segment. We are very encouraged by the current historic levels of orders and backlogs; however, due to the current supply chain issues including the lack of shipping containers and vessel space and limited overseas vendor capacity, orders are not converting to shipments as quickly as could be expected compared to the pre-pandemic environment and we expect that to continue at least into the second half of fiscal 2022. The current logistics challenges are slowing order fulfillment, particularly for Home Meridian whose average order sizes tend to be larger and more episodic versus orders for the traditional Hooker businesses, which tend to be smaller and more predictable. Additionally, Home Meridian orders are programmed out and scheduled for delivery to its larger accounts further into the future than usual, which is also contributing to the increased backlog.

The following discussion should be read in conjunction with the condensed consolidated financial statements, including the related notes, contained elsewhere in this quarterly report. We also encourage users of this report to familiarize themselves with all of our recent public filings made with the Securities and Exchange Commission (“SEC”), especially our ~~2017~~2021 Annual ~~Report filed with the SEC on April 14, 2017.~~Report. Our ~~2017~~2021 Annual Report contains critical information regarding known risks and uncertainties that we face, critical accounting policies and information on commitments and contractual obligations that are not reflected in our condensed consolidated financial statements, as well as a more thorough and detailed discussion of our corporate strategy and new business initiatives.

Our ~~2017~~2021 Annual Report and our other public filings made with the SEC are available, without charge, at www.sec.gov and at http://investors.hookerfurniture.com.

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~~Nature of Operations~~

Overview

Hooker Furniture Corporation, ~~(referred to as “we,” “us”, “our” “Hooker” or the “Company”),~~ incorporated in Virginia in 1924, is a designer, marketer and importer of casegoods (wooden and metal furniture), leather furniture and fabric-upholstered furniture for the residential, hospitality and contract markets. We also domestically manufacture premium residential custom leather and custom fabric-upholstered furniture. We are ranked among the nation’s top five largest publicly traded furniture sources, based on ~~2016~~2019 shipments to U.S. retailers, according to a ~~2017~~2020 survey by a leading trade publication.

Our strategy is to leverage the financial strength afforded us by Hooker’s slower-growing but highly profitable traditional Hooker companies in order to boost revenues and earnings both organically and by acquiring companies selling in faster-growing channels of distribution in which our legacy businesses are under-represented. Consequently, Hooker acquired Home Meridian on February 1, 2016.

Hooker’s acquisition of Home Meridian has better positioned us in some of the fastest growing and emerging channels of distribution, including e-commerce, warehouse membership clubs, and contract channels of distribution, although at lower margins. This acquisition has provided the Home Meridian segment’s current leadership team with greater financial flexibility by virtue of Hooker’s strong balance sheet and, consequently, has afforded it greater operational focus.

Additionally, the Acquisition of Shenandoah, a North Carolina-based domestic upholsterer, on September 29, 2017 should better position us in the “lifestyle specialty” retail distribution channel, which we believe is gaining market share and doing well with multiple demographic groups. For that channel, domestically-produced, customizable upholstery is extremely viable and preferred by the end consumers who shop at retailers in that channel.

~~Table of Contents~~

~~Overview~~

~~Our net sales are derived from the sale of home furnishings, as well as hospitality and contract furniture.~~ We believe that consumer ~~home furnishings purchases~~tastes and channels in which they shop for furniture are ~~impacted by an array of factors, including general economic conditions (such as consumer confidence, availability of consumer credit, energy~~evolving at a rapid pace and other commodity prices), and housing and mortgage markets. These purchases are also impacted by lifestyle-driven factors such as changes in fashion trends, disposable income, household formation and turnover, as well as competition with other discretionary purchases. Hospitality furniture sales are driven primarily by new hotel construction and hotel remodeling activity, which is linkedwe continue to the strength of the overall economy, including business and personal spending levels. Contract furniture sales are driven largely by senior living facility construction and remodeling activity, which is linkedchange to ~~the number of consumers entering retirement, which is partially related to the strength of the overall economy, including stock market performance.~~meet these demands.

Approximately 90% of our fiscal 2017 sales were of imported furniture products, primarily from Asia. Our lower overhead, variable-cost import operations help drive our profitability and provide us with more flexibility to respond to changing demand by adjusting inventory purchases from suppliers. This import model requires constant vigilance due to a larger investment in inventory and longer production lead times. We constantly evaluate our imported furniture suppliers and when quality concerns, inflationary pressures, or trade barriers (such as duties and tariffs) diminish our value proposition, we transition sourcing to other suppliers, often located in different countries or regions. Our domestic upholstery operations have both significantly higher overhead and fixed costs than our import operations, and their profitability can be and has been adversely affected by economic downturns.

Executive Summary-Results of Operations

The Acquisition closed on the last business day of our September fiscal period. Consequently, the Upholstery segment’s results include only Shenandoah’s October results. Shenandoah’s prior year results are not included in the results discussed below.

Consolidated net sales for the fiscal 2018 third quarter grew 8.7% to $157.9 million and grew 10.4% to $445.1 million in the first nine months of fiscal 2018 due primarily to net sales increases in the Upholstery and Home Meridian segments. Net sales in the Upholstery segment increased by $7.0 million or 35.8% as compared to the prior year quarter, primarily due to sales increases in the Hooker Upholstery division and the inclusion of Shenandoah’s sales for one month of the quarter. Home Meridian’s net sales increased $6.0 million or 7% as compared to the prior year third quarter. Hooker Casegoods net sales decreased 1.3% while All other segment net sales increased 2.7% for the fiscal 2018 third quarter.

For the fiscal 2018 first nine-months, Home Meridian, Upholstery and All other segments had net sales increases of 13.3%, 16% and 7%, respectively. Net sales in Hooker Casegoods were essentially flat. Consolidated net income for the fiscal 2018 third quarter increased $743,000 or 11.5% as compared to the prior year third quarter and increased $5.4 million or 37.9% compared to the prior year first nine months, despite the inclusion of approximately $700,000 of Acquisition-related expenses in both current year periods.

As discussed in greater detail under “Results of Operations” below, the following are the primary factors that affected our consolidated fiscal ~~2018 third~~2022 first quarter ~~and first nine months~~ results of operations:

~~Gross profit.~~

■

Consolidated net sales for fiscal 2022 first quarter increased by $58.3 million or 55.7% as compared to the prior year period, from $104.6 million to $162.9 million, due to an 89% sales increase in the Hooker Branded segment and 46% sales increases in both Home Meridian and Domestic Upholstery segments. All Other net sales decreased by 12.3% as H Contract has not yet recovered from certain impacts of the COVID-19 pandemic.

■

Consolidated gross profit increased both in absolute terms and as a percentage of net sales, ~~for the fiscal 2018 third quarter~~ due ~~primarily~~ to ~~higher net sales in the Home Meridian~~increased gross profit and margin at Hooker Branded and Domestic Upholstery segments. ~~Upholstery segment~~Home Meridian’s gross profit increased due to increased net sales at Hooker Upholstery, Bradington-Young and the addition of Shenandoah’s sales in the last month of the fiscal period. Home Meridian segment gross profit increased due to higher net sales and lower returns, sales allowance and discount expenseslightly as a percentage of net ~~sales. Consolidated~~sales as this segment was heavily impacted by higher freight costs which largely offset the sales increase. All Other’s gross profit ~~increased~~decreased in absolute terms and as a percentage of net ~~sales for~~sales.

■

Consolidated operating income was $12.2 million compared to $45.4 million operating loss in the ~~fiscal 2018 first nine-months for primarily~~prior year period, which was largely attributable to $44.3 million in non-cash impairment charges. Consolidated net income was $9.4 million or $0.78 per diluted share, as compared to net loss of $34.8 million or $(2.95) per diluted share in the ~~same reasons as noted for the quarterly periods.~~prior year period.

Review

We are pleased to report fiscal 2022 first quarter results with strong rebound and record growth one year after the severe onset of the COVID-19 pandemic as the Company witnessed the most significant downturn in its history in the prior year. Despite logistics challenges that impacted our Hooker Branded and Home Meridian segments and some raw material shortages affecting our Domestic Upholstery segment, consolidated net sales increased by 55.7% or $58.3 million as compared to the prior year period with all three reportable segments delivering significant revenue growth, driven by industry-wide ongoing high demand and consumer interest in home furnishings and home-related projects.

The Hooker Branded segment’s net sales increased by $24.2 million or 89% versus the prior year period as incoming orders nearly doubled and finished the quarter with a backlog that more than tripled versus the prior year first quarter end. The majority of Hooker Branded sales are shipped out of U.S. warehouses and because we source product on a consistent weekly basis, we were better able to flow imports from Asia and utilize lower cost freight contracts, which helped reduce the unfavorable impacts of vessel space and container shortages and domestic trucking availability. Additionally, we were also able to sell some slower-moving inventory from our warehouses. As the result of this higher sales volume, transportation cost containment, and to a lesser extent lower discounting, this segment remained highly profitable and contributed over 75% of consolidated operating profit during the quarter.

The Home Meridian segment’s net sales increased by $26.7 million or 46.4% in the fiscal 2022 first quarter versus the fiscal 2021 first quarter due to increased sales with major furniture chains and retail stores driven by increased demand and incoming orders. The Pulaski Furniture, Samuel Lawrence Furniture and Prime Resources International divisions experienced increased incoming orders and reported significantly increased net sales. However, profits on these increased sales were largely offset by higher freight costs as the result of continued global supply chain challenges. Freight costs have a more material and adverse impact on the Home Meridian segment compared to Hooker Branded segment due to relatively lower value of each of Home Meridian’s containers and Home Meridian’s greater reliance on the spot market for container freight. Net sales in the Accentrics Home division, which focuses on the e-commerce channel, increased slightly versus the prior year period as inventory availability had a more adverse impact on its sales, since ecommerce customers generally expect immediate shipment. The HMidea division’s sales to its Club accounts remained stable; however, current sales volumes are not sufficient to fully cover fixed costs at the relatively lower margins in this channel. The Samuel Lawrence Hospitality division was also unprofitable during the quarter due to very low sales volume as a result of continued low building and remodeling activity in the hospitality industry as it continues its slow climb out of the depths of the COVID crisis. The Home Meridian segment finished the quarter with a small operating profit and backlog tripled as compared to the prior year quarter end. Freight surcharges and price increases were imposed during the quarter to try to mitigate these increased costs; however these customer increases often trail the increases passed on by our suppliers.

~~Selling and administrative expenses.~~ During the fiscal 2018 third quarter, consolidated selling and administrative (“S&A”) expenses increased in absolute terms but remained flat as a percentage of net sales primarily due to higher selling expense, higher compensation and bonus expense, the inclusion of approximately $700,000 Acquisition-related costs, and, to a lesser extent, the addition of Shenandoah’s S&A expenses during the quarter. During the 2018 first nine months, consolidated S&A expenses increased in absolute terms primarily due to higher bonus and salaries expenses, selling expense, bad debt expense and the inclusion of approximately $700,000 in acquisition-related costs.

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~~Intangible asset amortization expense.~~ Amortization of intangibles of $624,000 and $1.3 million was recorded in the fiscal 2018 third quarter and the fiscal 2018 first nine months, respectively, compared to $334,000 and $2.8 million in the comparable prior year periods. Amortization expense for the fiscal 2018 third quarter includes $290,000 in amortization expense on newly-acquired Shenandoah intangibles.

§	~~Operating income.~~ Consolidated operating income increased $1.3 million or 12.7% in the fiscal 2018 third quarter and increased $7.9 million or 35.8% in the fiscal 2018 first nine months, due to the factors discussed above and in greater detail below.

~~Review~~

~~We were pleased to have achieved an approximate 9% consolidated sales increase during the fiscal 2018 third quarter, with sales up across all segments.~~

The ~~Home Meridian segment led the consolidated~~Domestic Upholstery segment’s net sales ~~increase with a 7% increase in net sales for the fiscal 2018 third quarter and 13.3% net sales increase for the fiscal 2018 first nine months, primarily due to~~ increased sales to mega, e-commerce and alternate channel accounts. The Home Meridian segment ended the first nine months with a 17.3% year-to-date increase in sales orders; however, that segment’s sales order backlog is down 14.7% as of quarter-end. Additionally, the customer mix and related sales allowance issues that strained Home Meridian’s marginsby $7.7 million or 45.9% in the fiscal ~~2018~~2022 first quarter ~~were muted in~~versus the second and third quarters. Consequently, that segment’s gross margins increased in both the fiscal third quarter and first nine months. Upholstery segment net sales increased in the double-digits for the quarter and for the nine-monthprior year period due to significantly increased sales volume at all three divisions. (In response to the ~~addition of Shenandoah’s sales~~COVID-19 restrictions and reduced orders, we temporarily closed our manufacturing plants at Bradington-Young and Shenandoah for ~~the last~~about a month of the fiscal period and on the strength of double-digit sales increases in the Hooker Upholstery division and including upper single-digit increases at the Bradington-Young division of that segment. Hooker Upholstery’s sales increased primarily due to a better in-stock position, now that the division has fully recovered from inventory shortages that resulted from a vendor-quality issue induring the prior year first quarter, and ~~due~~Sam Moore operated at about 50% capacity. As a result, these divisions did not report sales or reported sales at much lower levels during that month.) Although we are encouraged by 156% higher incoming orders during this quarter, we started to experience foam shortages and inflation in certain raw materials, such as foam, lumber, plywood, fabric and mechanisms. These manufacturing constraints led to reduced production levels later this quarter, which adversely impacted sales volume and led to operating inefficiencies in this segment. We believe the ~~shipments~~foam shortage is beginning to show signs of ~~recently introduced~~improvement and ~~well-received new products. Bradington-Young’s~~we are increasing prices to our customers where possible to offset increased raw material costs.

All Other’s net sales increased primarily due to increased sales of higher priced luxury motion products. Net sales increased 7.6% at Sam Moore in the third quarter; however, that division’s sales were essentially flat for the first nine-months of the fiscal year. Additionally, Sam Moore’s operating profit performance was flat for the third quarter and is lower for the nine-month period, as that division continues to struggle with labor efficiency issues that have led to longer delivery times, which has resulted in lower orders and net sales and increased manufacturing costs. The Upholstery segment’s year-to-date sales orders were up 7.7%; however, its order backlog was down 4.5% as of the end of the third quarter, bothdecreased by $368,000 or 12.3% as compared to the ~~comparable~~ prior year ~~periods. Hooker Casegoods segment net~~period due principally to 16.6% sales ~~were essentially flat for both~~decrease at H Contract. The senior living industry, which comprises the majority of H Contract’s business, has not yet recovered from the COVID-19 crisis. However, we believe the ongoing vaccination progress has helped the senior living industry as H Contract’s incoming orders increased by 9.5% during the quarter and nine-month period and operating profit for both periods remained strong despite the approximate $700,000 in Acquisition-related expenses included in that segment. Hooker Casegoods sales orders increased 5.7% year-to-date October and backlog was ~~up 25.1%~~35% higher than prior year quarter end. Despite the sale decline, H Contract still reported operating income for the quarter. Lifestyle Brands, a new business started in fiscal 2019, also reported a profit.

We used $238,000 generated from operating activities and existing cash on hand to pay $2.2 million of capital expenditures to enhance our business systems and facilities and $2.1 million in cash dividends to our shareholders. Cash and cash equivalents stood at ~~quarter-end.~~

$61.6 million at fiscal 2022 first quarter-end, a decrease of $4.2 million compared to the balance at fiscal 2021 year-end. Meanwhile, our inventory balance increased $11.3 million as production capacity at our Asian suppliers continues to return to pre-pandemic levels. We expect our cash balances to decrease as we continue to build inventories to meet increased customer demand. In addition to ~~increased net sales, consolidated operating profitability improved for~~our cash balance, we have an aggregate of $28.7 million available under our existing revolver to fund working capital needs, which we believe we have the ~~nine-month period both due~~financial resources to fund our business operations, including weathering the ~~absence of approximately $1 million in Home Meridian acquisition-related costs that were incurred in the prior year~~logistics issues, cost increases and ~~a $1.8 million decrease in amortization expense on Home Meridian acquisition-related intangibles.~~

production capacity constraints which are currently impacting our industry.

~~Table of Contents~~

Results of Operations

The following table sets forth the percentage relationship to net sales of certain items included in the condensed consolidated statements of income included in this report.

	Thirteen Weeks Ended
	May 2,			May 3,
	2021			2020
Net sales		100	%		100	%
Cost of sales		79.4			82.2
Gross profit		20.6			17.8
Selling and administrative expenses		12.7			18.3
Goodwill impairment charges		-			37.8
Trade name impairment charges		-			4.6
Intangible asset amortization		0.4			0.6
Operating income/(loss)		7.5			(43.4	)
Interest expense, net		-			0.2
Income/(Loss) before income taxes		7.5			(43.7	)
Income tax expense		1.7			(10.4	)
Net income/(loss)		5.8			(33.3	)

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Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, October 30, October 29, October 30,
2017 2016 2017 2016
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 78.3 78.7 78.5 78.7
Gross profit 21.7 21.3 21.5 21.3
Selling and administrative expenses 14.2 14.2 14.4 15.1
Intangible asset amortization 0.4 0.2 0.3 0.7
Operating income 7.1 6.8 6.8 5.5
Other income, net 0.2 0.1 0.2 0.2
Interest expense, net 0.2 0.2 0.2 0.2
Income before income taxes 7.1 6.8 6.8 5.5
Income tax expense 2.5 2.4 2.4 1.9
Net income 4.6 4.4 4.4 3.5

Fiscal ~~2018 Third~~2022 First Quarter Compared to Fiscal ~~2017 Third~~2021 First Quarter

	Net Sales																Net Sales
	Thirteen Weeks Ended																Thirteen Weeks Ended
	October 29, 2017					October 30, 2016					$ Change			% Change			May 2, 2021					May 3, 2020					$ Change			% Change
			% Net Sales					% Net Sales											% Net Sales					% Net Sales
Hooker Casegoods	$	36,373		23.0	%	$	36,861		25.4	%	$	(488	)		-1.3	%
Upholstery		26,701		16.9	%		19,664		13.5	%		7,037			35.8	%
Hooker Branded																	$	51,339		31.5	%	$	27,162		26.0	%	$	24,177			89.0	%
Home Meridian		92,068		58.3	%		86,053		59.2	%		6,015			7.0	%		84,411		51.8	%		57,665		55.1	%		26,746			46.4	%
Domestic Upholstery																		24,492		15.1	%		16,783		16.0	%		7,709			45.9	%
All Other		2,792		1.8	%		2,720		1.9	%		72			2.6	%		2,619		1.6	%		2,987		2.9	%		(368	)		-12.3	%
Consolidated	$	157,934		100	%	$	145,298		100	%	$	12,636			8.7	%	$	162,861		100	%	$	104,597		100	%	$	58,264			55.7	%

Unit Volume

FY18 Q3 % Change vs.
FY17 Q3
Average Selling Price (ASP)
FY18 Q3 % Change vs.
FY17 Q3

Hooker Casegoods 0.3 % Hooker Casegoods -0.7 %
Upholstery 42.5 % Upholstery -4.9 %
Home Meridian 8.6 % Home Meridian -1.7 %
All Other -12.4 % All Other 16.2 %
Consolidated 9.1 % Consolidated -0.3 %

Unit Volume	FY22 Q1 % Increase vs. FY21 Q1			Average Selling Price (ASP)	FY22 Q1 % Increase vs. FY21 Q1

Hooker Branded		72.2	%	Hooker Branded		8.5	%
Home Meridian		49.4	%	Home Meridian		-5.4	%
Domestic Upholstery		43.8	%	Domestic Upholstery		0.9	%
All Other		-20.5	%	All Other		6.2	%
Consolidated		51.0	%	Consolidated		0.6	%

Consolidated net sales increased significantly due to strong sales in all three reportable segments compared to the prior year period.

■

The Hooker Branded segment’s net sales increased by 89% as compared to the prior year period due to increased unit volume and ASP, driven by increased demand and lower discounting. A strong retail environment also enabled this segment to sell slower-moving inventory with less promotional and discounting costs.

■

The Home Meridian segment’s net sales increased due to increased unit volume with major furniture chains and retail stores as the result of strong demand, partially offset by decreased sales in the Samuel Lawrence Hospitality as the hospitality business has not recovered from the pandemic. Accentrics Home net sales increased slightly compared to prior year first quarter as e-commerce sales were more impacted by inventory availability. The ASP decrease was attributable to customer mix.

■

The Domestic Upholstery segment’s net sales increased due to increased unit volume in all three divisions. In the prior year period, we temporarily shut down Bradington-Young and Shenandoah manufacturing plants and kept the Sam Moore division operating at 50% capacity for a month. In fiscal 2022 first quarter, all three divisions were operated near full capacity in response to increased orders and backlog. However, we saw foam allocations and certain material shortages later in the quarter that limited our production levels and adversely impacted sales volume.

■

All Other’s net sales decrease was attributable to H Contract, as this division has not yet recovered from the pandemic, partially offset by continued growth at Lifestyle Brands.

	Gross Profit and Margin
	Thirteen Weeks Ended
	May 2, 2021					May 3, 2020					$ Change			% Change
			% Net Sales					% Net Sales
Hooker Branded	$	17,212		33.5	%	$	8,005		29.5	%	$	9,207			115.0	%
Home Meridian		10,135		12.0	%		6,809		11.8	%		3,326			48.8	%
Domestic Upholstery		5,355		21.9	%		2,783		16.6	%		2,572			92.4	%
All Other		880		33.6	%		1,056		35.4	%		(176	)		-16.7	%
Consolidated	$	33,582		20.6	%	$	18,653		17.8	%	$	14,929			80.0	%

Table of Contents

Consolidated ~~net sales~~gross profit and margin both increased ~~primarily due~~in the fiscal 2022 first quarter as compared to the prior year period.

■

The Hooker Branded segment’s gross profit and margin both increased due primarily to the net sales increase as well as lower fixed distribution costs. Product costs benefited from a favorable sourcing mix as we imported a higher portion of product from Vietnam which carried lower costs. The favorable sourcing mix was negatively impacted by higher freight costs and inflation from Asian vendors.

■

The Home Meridian segment’s gross profit increased in absolute terms and slightly as a percentage of net sales. Freight costs increased 300 bps as compared to prior year period, which was the primary driver of product costs increase. Despite a net sales increase, Home Meridian’s gross margins were negatively impacted by some higher-volume but lower-margin sales programs.

■

The Domestic Upholstery segment’s gross profit and margin increased significantly due to the net sales increases and operating efficiency improvements this segment experienced as compared to the prior year period that included lower sales volumes and operating inefficiencies due to temporary factory shutdowns. However, foam allocations and other critical material shortages began to impact production in the first quarter of fiscal 2022. This led to operating at reduced production volumes and resulted in production inefficiencies which adversely impacted gross profit. Inflation of raw material costs also drove increased product costs in this segment.

■

All Other’s gross profit and margin decreased in the first quarter due principally to net sales decline at H Contract.

	Selling and Administrative Expenses (S&A)
	Thirteen Weeks Ended
	May 2, 2021					May 3, 2020					$ Change			% Change
			% Net Sales					% Net Sales
Hooker Branded	$	7,771		15.1	%	$	6,672		24.6	%	$	1,099			16.5	%
Home Meridian		8,936		10.6	%		8,886		15.4	%		50			0.6	%
Domestic Upholstery		3,404		13.9	%		2,949		17.6	%		455			15.4	%
All Other		632		24.1	%		670		22.4	%		(38	)		-5.7	%
Consolidated	$	20,743		12.7	%	$	19,177		18.3	%	$	1,566			8.2	%

Consolidated selling and administrative (“S&A”) expenses increased in absolute terms while decreased as a percentage of net sales in the fiscal 2022 first quarter versus the prior year period.

■

The Hooker Branded segment’s S&A expenses increased in absolute terms due primarily to increased selling costs as the result of higher net sales, and to a lesser extent increased expenses incurred as part of our ERP system implementation. The increases were partially offset by lower bad debt expenses due to a customer write-off in the prior year and lower advertising supplies and market expenses due to the postponement of the Spring High Point Furniture Market. Hooker Branded segment’s S&A expenses decreased as a percentage of net sales due to increased net sales.

■

The Home Meridian segment’s S&A expenses increased slightly in absolute terms but decreased as a percentage of net sales. The increase was principally attributable to increased selling expenses due to higher net sales, partially offset by decreased travel expenses, decreased professional service expenses and other spending reductions.

■

The Domestic Upholstery segment’s S&A expenses increased in absolute terms due to increased selling expenses on higher net sales, higher salaries and wages compared to the prior year, when a number of employees were furloughed due to factory shutdowns, and increased depreciation expenses due to the accelerated depreciation of our existing ERP system, partially offset by lower medical claims costs.

■

All Other S&A expenses decreased in absolute terms due to decreased selling expenses as well as decreased advertising supply expenses. S&A expenses increased as a percentage of net sales due to lower net sales.

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	Goodwill impairment charges
	Thirteen Weeks Ended
	May 2, 2021					May 3, 2020					$ Change			% Change
			% Net Sales					% Net Sales
Home Meridian	$	-		0.0	%	$	23,187		40.2	%	$	(23,187	)
Domestic Upholstery		-		0.0	%		16,381		97.6	%		(16,381	)
Consolidated		-		0.0	%		39,568		37.8	%		(39,568	)

	Trade name impairment charges
	Thirteen Weeks Ended
	May 2, 2021					May 3, 2020					$ Change			% Change
			% Net Sales					% Net Sales
Home Meridian	$	-		0.0	%	$	4,750		8.2	%	$	(4,750	)
Consolidated		-		0.0	%	$	4,750		4.6	%		(4,750	)

In the prior year first quarter, we recorded $23.2 million and ~~Home Meridian segments, as well as the addition of Shenandoah’s October sales of $3.1~~$16.4 million in ~~the quarter. These increases were partially offset by a decline in average selling prices (“ASP”) in those same segments. Upholstery segment unit volume increased primarily due~~non-cash impairment charges to increased sales at the Hooker Upholstery division and to a lesser extent at Bradington Young and Sam Moore. Upholstery segment ASP decreased primarily due to lower ASP at the Hooker Upholstery and Sam Moore divisions, partially offset by higher ASP in the Bradington-Young division. The Home Meridian segment’s unit volume increased primarily due to increased sales to emerging channels, especially e-commerce. The decreasewrite down goodwill in Home Meridian segment ~~ASP was attributable~~and the Shenandoah division under Domestic Upholstery segment, respectively. We also recorded $4.8 million non-cash impairment charges to ~~customer mix. Although a small part of our consolidated results, unit volume decreased and ASP increased~~write down tradenames in ~~our All Other segment due~~the Home Meridian segment.

	Intangible Asset Amortization
	Thirteen Weeks Ended
	May 2, 2021					May 3, 2020					$ Change		% Change
			% Net Sales					% Net Sales
Intangible asset amortization	$	596		0.4	%	$	596		0.6	%	$	-		0.0	%

Intangible asset amortization expense stayed the same compared to the ~~lack of Homeware net sales during the quarter, as that business completed its wind-down during the fiscal 2018 second~~prior year first quarter.

Gross Profit and Margin
Thirteen Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Hooker Casegoods $ 11,346 31.2 % $ 12,081 32.8 % $ (735 ) -6.1 %
Upholstery 6,190 23.2 % 4,311 21.9 % 1,879 43.6 %
Home Meridian 15,808 17.2 % 13,742 16.0 % 2,066 15.0 %
All Other 934 33.4 % 791 29.1 % 143 18.1 %
Intercompany Eliminations - 1 (1 ) -100.0 %
Consolidated $ 34,278 21.7 % $ 30,926 21.3 % $ 3,352 10.8 %

	Operating Profit/(Loss) and Margin
	Thirteen Weeks Ended
	May 2, 2021					May 3, 2020						$ Change			% Change
			% Net Sales						% Net Sales
Hooker Branded	$	9,442		18.4	%	$	1,333			4.9	%	$	8,109			608.3	%
Home Meridian		866		1.0	%		(30,348	)		-52.6	%		31,214			102.9	%
Domestic Upholstery		1,688		6.9	%		(16,810	)		-100.2	%		18,498			110.0	%
All Other		247		9.4	%		387			12.9	%		(140	)		-36.2	%
Consolidated	$	12,243		7.5	%	$	(45,438	)		-43.4	%	$	57,681			126.9	%

~~Consolidated gross profit~~

Operating profitability increased in absolute terms and as a percentage of net sales, in the fiscal 2018 third quarter, primarily due to improved profit margin in Home Meridian and Upholstery segments due primarily to increased net sales in those segments, and the addition of Shenandoah’s October sales in the Upholstery segment. The Hooker Upholstery division was the primary driver of increased gross profit in the Upholstery segment due to increased sales and lower product costs. Those increases were partially offset by decreased gross profit in Hooker Casegoods segment due to the sales shortfall and increased returns and allowance and advertising expenses.

Selling and Administrative Expenses
Thirteen Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Hooker Casegoods $ 7,356 20.2 % $ 6,988 19.0 % $ 368 5.3 %
Upholstery 3,701 13.9 % 3,133 15.9 % 568 18.1 %
Home Meridian 10,867 11.8 % 9,906 11.5 % 961 9.7 %
All Other 525 18.8 % 626 23.0 % (101 ) -16.1 %
Consolidated $ 22,449 14.2 % $ 20,653 14.2 % $ 1,796 8.7 %

Consolidated S&A expenses remained flat as a percentage of net sales but increased in absolute terms due primarily to higher selling expenses, higher compensation and benefits expenses, increased bonus expenses due to increased earnings, the inclusion of approximately $700,000 in Acquisition-related costs, and, to a lesser extent, the addition of Shenandoah’s October S&A expenses.

Intangible Asset Amortization
Thirteen Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Intangible asset amortization $ 624 0.4 % $ 334 0.2 % $ 290 86.8 %

~~Table of Contents~~

~~Intangible asset amortization expense was higher in the current quarter due to Acquisition-related amortization expense.~~

Operating Profit and Margin
Thirteen Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Hooker Casegoods $ 3,990 11.0 % $ 5,092 13.8 % $ (1,102 ) -21.6 %
Upholstery 2,199 8.2 % 1,178 6.0 % 1,021 86.7 %
Home Meridian 4,607 5.0 % 3,503 4.1 % 1,104 31.5 %
All Other 409 14.6 % 165 6.1 % 244 147.9 %
Intercompany Eliminations - 1 (1 ) -100.0 %
Consolidated $ 11,205 7.1 % $ 9,939 6.8 % $ 1,266 12.7 %

~~Operating profitability increased for the fiscal 2018 third quarter compared to the prior year quarter, both as a percentage of net sales and in absolute terms,~~ due to the factors discussed above. Shenandoah’s October operating profitability of $197,000, net of $290,000 in intangible asset amortization expense on Acquisition-related intangibles, is included in the Upholstery segment’s results.

Interest Expense, net
Thirteen Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Consolidated interest expense, net $ 327 0.2 % $ 245 0.2 % $ 82 33.5 %

	Interest Expense, net
	Thirteen Weeks Ended
	May 2, 2021					May 3, 2020					$ Change			% Change
			% Net Sales					% Net Sales
Consolidated interest expense, net	$	31		0.0	%	$	208		0.2	%	$	(177	)		-85.1	%

Consolidated interest expense ~~increased~~decreased in fiscal 2022 first quarter primarily due to ~~increased interest rates on~~the payoff of our ~~variable-rate~~ term loans ~~and the addition~~in fiscal 2021 fourth quarter.

Table of ~~the New Unsecured Term Loan during the quarter.~~Contents

Income taxes
Thirteen Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Consolidated income tax expense $ 4,006 2.5 % $ 3,453 2.4 % $ 553 16.0 %

Effective Tax Rate 35.7 % 34.8 %

	Income taxes
	Thirteen Weeks Ended
	May 2, 2021						May 3, 2020						$ Change		% Change
				% Net Sales						% Net Sales
Consolidated income tax expense/(benefit)	$	2,773			1.7	%	$	(10,869	)		-10.4	%	$	13,642		125.5	%

Effective Tax Rate		22.7	%					23.8	%

We recorded income tax expense of $4$2.8 million for the fiscal ~~2018 third~~2022 first quarter compared to ~~$3.5~~income tax benefit of $10.9 million for the comparable prior year period. The effective tax rates for the fiscal ~~2018~~2022 and ~~2017 third quarter~~2021 first quarters were ~~35.7%~~22.7% and ~~34.8%~~23.8%, respectively.

	Net Income/(Loss)
	Thirteen Weeks Ended
	May 2, 2021					May 3, 2020						$ Change		% Change
Net income/(loss)			% Net Sales						% Net Sales
Consolidated	$	9,443		5.8	%	$	(34,819	)		-33.3	%	$	44,262		127.1	%

Diluted earnings/(loss) per share	$	0.78				$	(2.95	)

COVID-19

We monitor information on COVID-19 from the CDC and believe we are adhering to their recommendations regarding the health and safety of our personnel. To address the potential human impact of the virus, much of our administrative staff are telecommuting. For those administrative staff not telecommuting and our warehouse and domestic manufacturing employees, we have implemented appropriate social distancing policies and have stepped-up facility cleaning at each location. Non-essential domestic travel for our employees has ceased and international travel has been prohibited out-right. Testing, treatment and vaccinations for COVID-19 are covered 100% under our medical plan and counseling is available through our employee assistance plan to assist employees with financial, mental and emotional stress related to the virus and other issues. In addition, we are offering temporary paid leave to employees diagnosed with the virus (and those associates with another diagnosed person or persons in their household) and are working to accommodate associates with child-care issues related to school or day-care closures.

As more state and local governments have eased restrictions on retail activities, we have seen a significant improvement in our business conditions, including order rates, profitability, and financial condition. We continue to cautiously make decisions regarding our financial resources to weather and adapt to changes in market conditions, including any remaining impacts of COVID-19 and future pandemics.

Outlook

Our ~~effective tax rate was higher~~consolidated orders and backlogs are more than double historical norms as we head into the summer months. Given this strong position, we are cautiously optimistic, considering the industry-wide supply chain, logistics and raw materials shortages and inflation.

We continue to manage our logistics issues, with the goal of minimizing costs and maximizing delivery; however, there is no indication that ocean freight container rates will return to pre-COVID-19 levels in the ~~fiscal 2018 third quarter primarily due~~near term. We believe we have mitigated these dynamics as much as possible through surcharges and price increases, but these increases often trail price increases received by logistics partners and suppliers. Additionally, these supply-side factors are unpredictable and often involve frequent, unexpected changes with little or no notice.

We believe that several macroeconomic factors provide a nice path for growth such as the strong housing market and favorable demographics with the large Millennial generation becoming highly engaged in household formation and home furnishings purchases. However, we expect increased competition for consumer discretionary income from industries such as travel, apparel, dining out and in-person events as vaccination rates increase.

While we expect the extraordinary levels of demand for home furnishings to diminish somewhat, we also expect that demand for home furnishings will settle into a higher ~~state tax expense. Higher state tax expense was due~~level of demand than pre-pandemic. We believe we are well positioned to ~~tax nexus in an additional state during the quarter.~~help consumers enhance their homes with comfortable, stylish and quality home furnishings.

Net Income
Thirteen Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Consolidated $ 7,202 4.6 % $ 6,459 4.4 % $ 743 11.5 %

Basic earnings per share $ 0.62 $ 0.56
Diluted earnings per share $ 0.61 $ 0.56

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~~Fiscal 2018 First Nine Months Compared to Fiscal 2017 First Nine Months~~

Net Sales
Thirty-Nine Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Hooker Casegoods $ 104,067 23.4 % $ 103,372 25.6 % $ 695 0.7 %
Upholstery 71,247 16.0 % 61,404 15.2 % 9,843 16.0 %
Home Meridian 262,173 58.9 % 231,391 57.4 % 30,782 13.3 %
All Other 7,627 1.7 % 7,125 1.8 % 502 7.0 %
Consolidated $ 445,114 100 % $ 403,292 100 % $ 41,822 10.4 %

Unit Volume
FY18 YTD % Change
vs. FY17 YTD
Average Selling Price (ASP)
FY18 YTD % Change
vs. FY17 YTD

Hooker Casegoods 0.5 % Hooker Casegoods 0.5 %
Upholstery 19.1 % Upholstery -2.9 %
Home Meridian 19.3 % Home Meridian -5.0 %
All Other -4.9 % All Other 12.2 %
Consolidated 16.7 % Consolidated -5.3 %

Fiscal 2018 first nine months consolidated net sales increased in all reporting segments, led by increases of $30.8 million in the Home Meridian segment and a $9.8 million in the Upholstery segment. The Home Meridian segment’s unit volume increased primarily due to increased sales to mega and e-commerce accounts. The decrease in Home Meridian segment ASP was attributable to customer mix. Hooker Casegoods segment unit volume and ASP slightly increased in the nine-month period. We believe Hooker Casegoods sales were flat due to a softening in retail furniture sales in the traditional furniture channels in which that segment competes, a trend which we believe is occurring throughout the industry. Unit volume in the Upholstery segment increased primarily due to increased sales at Hooker Upholstery and due to the inclusion of Shenandoah’s October sales. Upholstery segment ASP decreased due to the increased proportion of lower priced Hooker Upholstery and Sam Moore products sold during the period. ASP increased in our All Other segment due to the increased H Contract sales and increased share of H Contract sales as a part of All Other sales, as the liquidation of Homeware inventory was completed at the end of second quarter.

Gross Profit and Margin
Thirty-Nine Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Hooker Casegoods $ 32,984 31.7 % $ 32,897 31.8 % $ 87 0.3 %
Upholstery 17,255 24.2 % 14,029 22.8 % 3,226 23.0 %
Home Meridian 42,875 16.4 % 36,865 15.9 % 6,010 16.3 %
All Other 2,420 31.7 % 2,204 30.9 % 216 9.8 %
Intercompany Eliminations 4 8 (4 ) -50.0 %
Consolidated $ 95,538 21.5 % $ 86,003 21.3 % $ 9,535 11.1 %

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Consolidated gross profit increased in absolute terms and stayed nearly flat as a percentage of net sales in the fiscal 2018 first nine months. Home Meridian segment gross profit increased in absolute terms primarily due to increased sales Upholstery segment gross profit increased primarily due to higher sales in Hooker Upholstery and Bradington Young divisions, and to a lesser extent, the addition of Shenandoah’s October results. The Hooker Upholstery division benefited from lower discounts and allowances, favorable core cost of goods sold, and a one-time vendor price concession due to a prior-year vendor quality issue. Hooker Casegoods segment gross profit was essentially flat in absolute terms and as a percentage of net sales. Increased gross profit in the All Other segment was due to increased gross profit at H Contract due to increased sales, partially offset by higher discounts for the liquidation of Homeware inventory during the first half.

Selling and Administrative Expenses
Thirty-Nine Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Hooker Casegoods $ 21,066 20.2 % $ 21,383 20.7 % $ (317 ) -1.5 %
Upholstery 10,158 14.3 % 9,773 15.9 % 385 3.9 %
Home Meridian 31,216 11.9 % 28,108 12.1 % 3,108 11.1 %
All Other 1,699 22.3 % 1,774 24.9 % (75 ) -4.2 %
Consolidated $ 64,139 14.4 % $ 61,038 15.1 % $ 3,101 5.1 %

Consolidated S&A expenses decreased as a percentage of net sales primarily due to increased net sales. Consolidated S&A expenses increased in absolute terms primarily due to higher compensation and benefits expenses, higher bonus expenses due to increased earnings and increased selling expenses, higher bad debt expense due to the write-off of a customer balance in the fiscal 2018 first quarter and the inclusion of approximately $700,000 in Acquisition-related costs.

Intangible Asset Amortization
Thirty-Nine Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Intangible asset amortization $ 1,291 0.3 % $ 2,801 0.7 % $ (1,510 ) -53.9 %

Intangible asset amortization expense was higher in the prior year period due to the short amortization period of some of the intangible assets. The decrease was partially offset by intangible asset amortization expense recognized in the period on Acquisition-related intangibles.

Operating Profit and Margin
Thirty-Nine Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Hooker Casegoods $ 11,918 11.5 % $ 11,514 11.1 % $ 404 3.5 %
Upholstery 6,807 9.6 % 4,256 6.9 % 2,551 59.9 %
Home Meridian 10,658 4.1 % 5,956 2.6 % 4,702 78.9 %
All Other 721 9.5 % 430 6.0 % 291 67.7 %
Intercompany Eliminations 4 8 (4 ) -50.0 %
Consolidated $ 30,108 6.8 % $ 22,164 5.5 % $ 7,944 35.8 %

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Operating profitability increased for the fiscal 2018 first nine months compared to the same prior-year period, both as a percentage of net sales and in absolute terms, due to the factors discussed above.

Interest Expense, net
Thirty-Nine Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Consolidated interest expense, net $ 860 0.2 % $ 755 0.2 % $ 105 13.9 %

Consolidated interest expense increased primarily due to increases in the interest rates on our variable-rate term loans and the addition of the New Unsecured Term Loan during the fiscal 2018 third quarter.

Income taxes
Thirty-Nine Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Consolidated income tax expense $ 10,574 2.4 % $ 7,737 1.9 % $ 2,837 36.7 %

Effective Tax Rate 34.9 % 35.1 %

We recorded income tax expense of $10.6 million for the fiscal 2018 first nine months, compared to $7.7 million for the same prior-year period. The effective tax rates for the first nine months of fiscal 2018 and 2017 were 34.9% and 35.1%, respectively. The effective tax rate was lower in the 2018 first nine months due to the settlement of an uncertain tax position on captive insurance, excess tax benefits from share-based compensation and a state tax credit received during the first quarter of fiscal 2018 first quarter.

Net Income
Thirty-Nine Weeks Ended
October 29, 2017 October 30, 2016 $ Change % Change
% Net Sales % Net Sales
Consolidated $ 19,726 4.4 % $ 14,308 3.5 % $ 5,418 37.9 %

Basic earnings per share $ 1.70 $ 1.24
Diluted earnings per share $ 1.69 $ 1.23

~~Outlook~~

Retail conditions were weak across all segments in September, partially due to the hurricanes that hit Florida and Texas. In October, retail conditions bounced back, along with incoming order trends and shipments across all segments. The October High Point Furniture Market was good for most divisions. However, due to a later than normal Chinese New Year, more of the heavy shipping activity that normally precedes the holiday will fall in the first quarter of fiscal 2019.

For the fiscal 2018 fourth quarter, we expect the sales order and shipment trends we are seeing in the Hooker Casegoods and Upholstery segments will favorably impact sales in those segments; however, we expect that reduced orders and backlog in the Home Meridian segment compared to the same period a year ago will negatively impact sales in that segment.

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We believe the overall macro-economic environment is strong, especially housing and consumer confidence. Pending home sales recently rebounded after three straight months of declines, which we believe may be indicative of improving existing home sales. Recent data revealed new home purchases to be at their fastest pace in a decade, with a 6.2% monthly increase, marking a third consecutive monthly gain. Additionally, November consumer confidence increased for the fifth consecutive month and remains at a seventeen-year high. Along with recent record-breaking stock market performance and the macro-economic environment, we believe the strategies we have in place are working, and we expect Shenandoah to be a solid contributor going forward.

~~The Acquisition~~

~~We believe that consumer tastes and channels in which they shop for furniture are evolving at a rapid pace and we are changing to meet these demands.~~

As was the case with Hooker’s 2016 Acquisition of Home Meridian International, we are continuing to leverage Hooker’s financial strength to boost revenues and earnings both organically and by acquisition, as we target growth in channels of distribution that are growing faster than furniture industry averages.

Consequently, on September 29, 2017 we acquired substantially all of the assets and assumed certain liabilities of Shenandoah Furniture, Inc. for $32.7 million in cash and the issuance of 176,018 shares of our common stock valued at $8.4 million (such numbers are subject to agreed upon post-closing working capital adjustments). Based on the way we manage, evaluate and internally report our operations, we determined that Shenandoah’s newly acquired business will be reported in our Upholstery segment.

We believe Shenandoah is well-positioned in a distribution channel in which we are currently under-represented; namely, the “lifestyle specialty” retail distribution channel, which is made of up retailers who offer furnishings and decor in the upper medium price points, both in traditional brick and mortar stores and online. We believe that lifestyle specialty furniture stores are gaining market share and doing well with multiple demographic groups. For that channel, domestically-produced, customizable upholstery is extremely viable and preferred by the end consumer who shops there.

We expect the Acquisition to be accretive to earnings in our 2019 fiscal year, which begins on January 29, 2018. In the short-term, we expect a nominal reduction in earnings for the remainder of fiscal 2018 due to the timing of the Acquisition.

Refer to Part II Item 1A “Risk Factors” in this report for changes to our risk factors as a result of the Acquisition. For a complete discussion of our risk factors, you should carefully review the detailed discussions in the "Risk Factors" and "Business" section in our Annual Report on Form 10-K filed with the SEC on April 14, 2017.

Financial Condition, Liquidity and Capital Resources

Cash Flows – Operating, Investing and Financing Activities

	Thirty-Nine Weeks Ended						Thirteen Weeks Ended
	October 29,			October 30,			May 2,			May 3,
	2017			2016			2021			2020
Net cash provided by operating activities	$	25,065		$	31,265		$	238		$	18,924
Net cash used in investing activities		(35,899	)		(87,625	)		(2,343	)		131
Net cash provided by financing activities		3,399			45,544
Net decrease in cash and cash equivalents	$	(7,435	)	$	(10,816	)
Cash used in financing activities								(2,140	)		(3,846	)
Net (decrease)/increase in cash and cash equivalents							$	(4,245	)	$	15,209

During the ~~nine~~three months ~~period~~ ended ~~October 29, 2017,~~May 2, 2021, we used a portion of the existing cash ~~generated from operations,~~and cash equivalent on hand ~~and $12 million term-loan proceeds helped fund the Acquisition,~~to pay ~~$4.4 million in long-term debt payments, cash dividends of $4.2 million and capital expenditures of $2.7 million to enhance our business systems and facilities.~~

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In comparison, during the nine months ended October 30, 2016, cash generated from operations, cash on hand, term-loan proceeds and insurance proceeds helped fund the Home Meridian acquisition, pay $10.8 million in long-term debt payments, pay $3.5 million in cash dividends and fund $1.9$2.2 million of capital expenditures to enhance our business systems and facilities, $2.1 million in cash dividends, and ~~to pay $682,000~~$155,000 in life insurance premiums on Company-owned life insurance policies.

In comparison, during the three months ended May 3, 2020, we used a portion of the $18.9 million cash generated from operations and $673,000 life insurance proceeds to pay $2.2 million in principal and interest payments on our term loans, $1.9 million in cash dividends, and $162,000 in life insurance premiums on Company-owned life insurance policies.

Liquidity, Financial Resources and Capital Expenditures

Our financial resources include:

■

available cash and cash equivalents, which are highly dependent on incoming order rates and our operating performance;

■

expected cash flow from operations; ~~and~~

■

available lines of ~~credit.~~credit; and

■

cash surrender value of Company-owned life insurance.

We believe these resources are sufficient to meet our business requirements and the payment of dividends through fiscal ~~2018~~2022 and for the foreseeable future, ~~including:~~including expected capital expenditures and working capital needs.

§	~~capital expenditures;~~

§	~~working capital, including capital required to fund our Pension Plan, SERP and SRIP plans;~~

§	~~the payment of regular quarterly cash dividends on our common stock; and~~

§	~~the servicing of our acquisition-related debt.~~

Loan ~~Agreement~~Agreements and Revolving Credit Facility

~~On September 29, 2017, we entered into a second~~

We paid off the remaining $24.3 million term loans at the end of fiscal 2021 and currently have one $35 million revolving credit facility (the “Existing Revolver”). The credit facility was provided for in the amended and restated loan agreement (the ~~“Loan~~“Original Loan Agreement”), which we entered into on February 1, 2016 with Bank of America, ~~N.A.~~N. A. (“BofA”) ~~in connection with the completion of the Acquisition Note 2. “Acquisition,” above. The Loan Agreement amends and restates the amended and restated loan agreement that the Company~~. We entered ~~into with BofA on February 1, 2016. The~~a Second Amended and Restated Loan Agreement ~~provides us with a new $12 million unsecured term loan (the “New Unsecured Term Loan”).~~

Amounts outstanding under the New Unsecured Term Loan will bear interest at a rate, adjusted monthly, equal to the then current LIBOR monthly rate plus 1.50%. We must repay the principal amount borrowed under the New Unsecured Term Loan in monthly installmentsdated as of approximately $143,000, together with any accrued interest, until the full amount borrowed is repaid or until the earlier of September 30, 2022 and the expiration of the Existing Revolver, at which time all amounts outstanding under the New Unsecured Term Loan will become due and payable. We may prepay the outstanding principal amount under the New Unsecured Term Loan, in full or in part, on any interest payment date without penalty. On September 29, 2017 ~~we borrowed~~(the “Second Amended and Restated Loan Agreement”), a First Amendment to Second Amended and Restated Loan Agreement dated as of January 31, 2019, a Second Amendment to Second Amended and Restated Loan Agreement dated as of November 4, 2020, and a Third Amendment to the ~~full $12 million~~Second Amended and Restated Loan Agreement dated as of January 27, 2021. Details of our Existing Revolver are outlined below:

■

The facility is available between January 27, 2021 and February 1, 2026 or such earlier date as the availability may terminate or such later date as BofA may from time to time in its sole discretion designate in any extension notice;

■

During the availability period, BofA will provide a line of credit to the maximum amount of the Existing Revolver;

■

The initial amount of the Existing Revolver is $35 million;

■

The sublimit of the facility available for the issuance of letters of credit was increased to $10 million;

■

The actual daily amount of undrawn letters of credit is subject to a quarterly fee equal to a per annum rate of 1%;

■

We may, on a one-time basis, request an increase in the Existing Revolver by an amount not to exceed $30 million at BofA’s discretion; and

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■

Any amounts outstanding under the Existing Revolver bear interest at a rate, equal to the then current LIBOR monthly rate (adjusted periodically) plus 1.00%. We must also pay a quarterly unused commitment fee at a rate of 0.15% determined by the actual daily amount of credit outstanding during the applicable quarter.

The loan covenants agreed to under the ~~New Unsecured Term Loan.~~

~~The~~Second Amended and Restated Loan Agreement ~~also included~~continue to apply to us. They include customary representations and warranties and requires us to comply with customary covenants, including, among other things, the following financial covenants:

■

Maintain a ratio of funded debt to EBITDA not ~~exceeding:~~exceeding 2.00:1.00.

o	~~2.50:1.0 through August 31, 2018;~~

o ■	~~2.25:1.0 through August 31, 2019; and~~

o	~~2.00:1.00 thereafter.~~

·	A basic fixed charge coverage ratio of at least 1.25:1.00; and

■

Limit capital expenditures to no more than $15.0 million during any fiscal ~~year with expenditures to acquire fixed assets pursuant to the Acquisition being excluded for the fiscal year in which the Acquisition occurs.~~year.

~~The Loan Agreement~~

They also ~~limits~~limit our right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions. ~~The Loan Agreement does~~They do not restrict our ability to pay cash dividends on, or repurchase shares of our common stock, subject to our compliance with the financial covenants discussed above, if we are not otherwise in default under the ~~Loan Agreement.~~agreements.

We were in compliance with each of these financial covenants at ~~October 29, 2017~~May 2, 2021 and expect to remain in compliance with existing covenants ~~through fiscal 2018 and~~ for the foreseeable future.

We believe we have the financial resources to fund our business operations, including weathering the logistics issues, cost increases and production capacity constraints which are currently impacting our industry.

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Revolving Credit Facility Availability

As of ~~October 29, 2017,~~May 2, 2021, we had an aggregate ~~$28.5~~$28.7 million available under our ~~revolving credit facility~~Existing Revolver to fund working capital needs. Standby letters of credit in the aggregate amount of ~~$1.5~~$6.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the ~~revolving credit facility~~Existing Revolver as of ~~October 29, 2017.~~May 2, 2021. There were no additional borrowings outstanding under the revolving credit facility ~~on October 29, 2017.~~as of May 2, 2021.

Capital Expenditures

We expect to spend ~~between $500,000 to $1.0~~approximately $5 million in capital expenditures ~~during~~over the remainder of ~~the 2018~~ fiscal ~~year~~2022 to maintain and enhance our operating systems and facilities. Of those amounts, we expect to spend approximately:

●

$3.0 million outfitting a newly built leased warehouse space in Savannah, Georgia that we expect to occupy in the fall of 2021. The facility will consolidate several older, less efficient Home Meridian segment warehouses into a single strategically located distribution facility near the port of Savannah and major interstate highways. We believe this is critical to servicing customers and is expected to reduce transportation costs and increase operating efficiencies; and

~~Contractual Obligations~~

●

$1.0 million on implementation costs for a new common, cloud-based Enterprise Resource Planning (“ERP”) platform which we expect to be online in our Hooker Branded segment and certain divisions under Domestic Upholstery segment by mid-2022, with other segments following thereafter.

~~The contractual obligations reflected~~

Enterprise Resource Planning

In early fiscal 2022, our Board of Directors approved an upgrade to our current ERP system and implementation efforts began shortly thereafter. We expect to implement the ERP upgrade in our ~~2017 Annual Report on Form 10-K for~~Hooker Branded segment and certain divisions under Domestic Upholstery segment by mid calendar 2022, with Home Meridian and Shenandoah divisions following afterwards. To complete the ERP system implementation as anticipated, we will be required to expend significant financial and human resources. We anticipate spending approximately $5.5 million over the course of this project, with a significant amount of time invested by our associates. In the fiscal ~~year ended January 29, 2017 have materially changed due to the Acquisition. Estimated~~ ~~additional~~ ~~contractual obligations due to the Acquisition as of October 29, 2017 are as follows:~~

Estimated Additional Cash Payments Due by Period (In thousands)
Less than More than
1 Year 1-3 Years 3-5 Years 5 years Total

Long-Term Debt Obligations (1) $ 1,716 $ 3,432 $ 6,852 $ - $ 12,000
Operating leases (2) 821 1,643 1,643 1,643 5,750

Total contractual cash obligations $ 2,537 $ 5,075 $ 8,495 $ 1,643 $ 17,750

~~(1)~~

~~These amounts represent contractual cash payments due under our acquisition-related term loans. See Note 9, “Debt” for additional information about our debt.~~

~~(2)~~

~~These amounts represent estimated cash payments due under operating leases for real estate utilized in Shenandoah’s operations.~~

~~Share Repurchase Authorization~~

During fiscal 2013, our board of directors authorized the repurchase of up to $12.5 million of shares of the Company’s common stock. The authorization does not obligate us to acquire a specific number of shares during any period and does not have an expiration date, but it may be modified, suspended or discontinued at any time at the discretion of our board of directors. Repurchases may be made from time to time in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, and subject to our cash requirements for other purposes, compliance with the covenants under the Loan Agreement and other factors we deem relevant. No shares have been repurchased since fiscal 2013. Approximately $11.8 million remained available for future repurchases under the authorization as of October 29, 2017.

~~Recently Issued Accounting Standards~~

~~In May 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2017-09,~~ ~~Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 was issued to provide clarity and reduce diversity in practice, cost and complexity when applying the guidance in~~ ~~Topic 718, Compensation—Stock Compensation~~, to a change to the terms or conditions of a share-based payment award. The amendments in this ASU provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Essentially, an entity will not have to account for the effects of a modification if: (a) The fair value of the modified award is the same immediately before and after the modification; (b) the vesting conditions of the modified award are the same immediately before and after the modification; and (c) the classification of the modified award as either an equity instrument or liability instrument is the same immediately before and after the modification. The amendments in ASU 2017-09 will become effective for us as of the beginning of our 2019 fiscal year on January 29, 2018. Early adoption is permitted, including adoption in any interim period. The adoption of this guidance is not expected to have a material impact upon our financial condition or results of operations.

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~~In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ (“ASU 2017-07).” Currently, net benefit cost is reported as an employee cost within operating income. The amendment requires the bifurcation of net benefit cost. The service cost component will be presented with the other employee compensation costs in operating income. The other components will be reported outside of operating income and will not be eligible for capitalization. The guidance is required to be applied on a retrospective basis for the presentation of the service cost component and the other components of net benefit cost (including gains and losses on curtailments and settlements, and termination benefits paid through plans), and on a prospective basis for the capitalization of only the service cost component of net benefit cost. Amounts capitalized into assets prior to the date of adoption should not be adjusted through a cumulative effect adjustment, but should continue to be recognized in the normal course, as for example, inventory is sold or fixed assets are depreciated. The amendments in ASU 2017-07 will become effective for us at the beginning of our 2019 fiscal year beginning on January 29, 2018. We are currently evaluating the impact the adoption of ASU 2017-17 will have on our consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business.~~ ASU 2017-01 provides a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) does not constitute a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in ASU 2017-01 (a) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (b) remove the evaluation of whether a market participant could replace missing elements. The amendments in ASU 2017-01 will apply prospectively and will become effective for as at the beginning of our 2019 fiscal year on January 29, 2018. The adoption of this guidance is not expected to have a material impact upon our financial condition or results of operations.

~~In February 2016, the FASB issued ASU 2016-02~~ ~~Leases, which, among other things, requires lessees to recognize~~ a right-of-use asset and a liability on the balance sheet for all leases, with the exception of short-term leases. This change will increase reported assets and liabilities by lessees– in some cases very significantly. The lease liability recognized will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. Leases will continue to be classified as either operating or finance leases in the income statement. Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 supersedes Topic 840, Leases. The transitional guidance for adopting the requirements of ASU 2016-02 calls for a modified retrospective approach that includes a number of optional practical expedients that entities may elect to apply. This standard is effective for public entities for annual and interim periods in fiscal years beginning after December 15, 2018, which will be the2022 first quarter, ~~of our 2020 fiscal year. We are currently evaluating the impact that the adoption of ASU 2016-02 will have~~we spent approximately $400,000 on ~~our consolidated financial statements and have not made any decision on the method of adoption with respect~~this project.

Dividends

Subsequent to ~~the optional practical expedients.~~

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (“ASU 2014-09”). The amendments in ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606, ~~Revenue from Contracts with Customers~~. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”), which defers the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09 is now effective for financial statements issued for annual reporting periods beginning after December 15, 2017. We will adopt ASU No. 2014-09 on January 30, 2018, the first day of our 2019 fiscal year.

Entities may adopt this new standard either retrospectively for all periods presented in the financial statements (i.e., the full retrospective method) or as a cumulative-effect adjustment as of the date of adoption (i.e., the modified retrospective method), without applying to comparative years’ financial statements. We plan to adopt the standard using the modified retrospective method.

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In the process of evaluating the impact that ASU No. 2014-09 will have on our consolidated financial statements and disclosures, we have followed the five-step model imposed by the new guidance and are in the process of completing a comprehensive review of revenue streams across our reporting segments. The review includes the determination of whether a contract or an arrangement exists, the identification of performance obligations, factors affecting the determination of transaction price, such as promotional incentives and allowances, and factors affecting the classification of receipts as revenue, such as principal versus agent considerations on logistics services and our container direct sales. Our analysis to date has included reviewing material agreements, sales policies and procedures, interviewing sales and customer care management and analyzing those findings based on the five-step model described in the new standard.

~~As of~~ the end of the fiscal ~~2018 third~~2022 first quarter, ~~with~~on June 3, 2021, our board of directors declared a quarterly cash dividend of $0.18 per share, which will be paid on June 30, 2021 to shareholders of record at June 16, 2021. The Board will continue to evaluate the ~~exception~~appropriateness of the ~~newly acquired operations~~current dividend rate considering our performance and economic conditions in future quarters.

Table of Shenandoah, we estimate our analysis is approximately fifty percent complete. Implementation matters remaining include completing our analysis, assessing accounting policy elections and disclosures under the new guidance and evaluating the systems, processes and controls to support any possible changes to our revenue recognition practices. Based on our analysis to date, we do not believe the standard will have a material effect on our financial statements. However, our analysis is not yet complete and this preliminary conclusion is subject to change. We expect our evaluation of the impact of adopting ASU No. 2014-09 to be completed in the fourth quarter of our 2018 fiscal year, which ends January 28, 2018.Contents

Critical Accounting Policies

~~There~~

Except as discussed below, there have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our ~~2017~~2021 Annual Report.

On the first day of the current fiscal year, we adopted the accounting standards outlined in Part 1, Notes to Condensed Consolidated Financial Statements, “Note 2. Recently Adopted Accounting Policies” (“Note 2”). See Note 2 for additional information related to the impact of adopting this accounting standard.

Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market Risk

We are exposed to various types of market risk in the normal course of our business, including the impact of interest rate changes, raw materials price risk and ~~fluctuations~~changes in foreign currency exchange rates, which could impact our results of operations or financial condition. We manage our exposure to this risk through our normal operating activities.

Interest Rate Risk

Borrowings under ~~our~~the revolving credit facility ~~and the Unsecured Term Loan bear~~bears interest based on LIBOR plus ~~1.5% and borrowings under the Secured Term Loan bear interest based on LIBOR plus 0.5%~~1.0%. As such, ~~these~~this debt ~~instruments expose~~instrument exposes us to market risk for changes in interest rates. There was no outstanding balance under our revolving credit facility as of ~~October 29, 2017,~~May 2, 2021, other than amounts reserved for standby letters of credit in the amount of ~~$1.5~~$6.3 million. However, as of October 29, 2017, $55.2 million was outstanding under our term loans. A 1% increase in the LIBOR rate would result in an annual increase in interest expenses on our terms loans of approximately $512,000.

Raw Materials Price Risk

We are exposed to market risk from changes in the cost of raw materials used in our domestic upholstery manufacturing ~~processes:~~processes; principally, wood, fabric and foam products. Increases in home construction activity could result in increases in wood and fabric costs. Additionally, the cost of petroleum-based foam products we utilize are sensitive to crude oil prices, which vary due to supply, demand and ~~geopolitical~~geo-political factors.

Currency Risk

For imported products, we generally negotiate firm pricing denominated in U.S. Dollars with our foreign suppliers, typically for periods of at least one year. We accept the exposure to exchange rate movements beyond these negotiated periods. We do not use derivative financial instruments to manage this risk but could choose to do so in the future. Most of our imports are purchased from suppliers located in Vietnam and China. The Chinese currency floats within a limited range in relation to the U.S. Dollar, resulting in exposure to foreign currency exchange rate fluctuations.

Since we transact our imported product purchases in U.S. Dollars, a relative decline in the value of the U.S. Dollar could increase the price we pay for imported products beyond the negotiated periods. We generally expect to reflect substantially all of the effect of any price increases from suppliers in the prices we charge for imported products. However, these changes could adversely impact sales volume or profit margins during affected periods.

~~Table of Contents~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended ~~October 29, 2017.~~May 2, 2021. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective as of ~~October 29, 2017~~May 2, 2021 to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company’s management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

On September 29, 2017, we completed the acquisition of substantially all of the assets of Shenandoah Furniture, Inc. As permitted by SEC guidance for newly acquired businesses, we intend to exclude the Shenandoah operations from the scope of our Sarbanes-Oxley Section 404 report on internal controls over financial reporting for the year ended January 28, 2018. We are in the process of implementing our internal control in the Shenandoah operations and expect that this effort will be completed in fiscal 2019.

There have been no changes in our internal control over financial reporting during the fiscal quarter ended ~~October 29, 2017,~~May 2, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

~~Item 1A. Risk Factors~~

Due to the Acquisition of Shenandoah Furniture, Inc., (the “Acquisition”) there have been changes to the risk factors described in Item 1A. “Risk Factors” in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on April 14, 2017, and in the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on September 8, 2017 . For a complete discussion of the Company's risk factors, you should carefully review the detailed discussions in the "Risk Factors" and "Business" section in the Company's Annual Report on Form 10-K filed April 14, 2017 and the following risk factors:

~~We may fail to realize all of the anticipated benefits of the Acquisition.~~

While we believe the Acquisition, will be accretive to our earnings per share beginning in fiscal 2019, this expectation is based on preliminary estimates which may materially change. While we do not expect to merge operations or change customer-facing services, the success of this acquisition will depend, in part, on our ability to improve each business by sharing best practices in order to lower costs, improve efficiencies and grow sales. While we have based our expectations in part on the historical results and trends in Shenandoah’s business, there can be no assurance regarding when or the extent to which we will be able to realize these benefits. Achieving the anticipated benefits is subject to a number of uncertainties, including whether the business acquired can be operated in the manner we intend. Events outside of our control could also adversely affect our ability to realize the anticipated benefits from the acquisition. Thus, the integration of Shenandoah’s business may be unpredictable, subject to delays or changed circumstances, and we can give no assurance that the acquired business will perform in accordance with our expectations, or that our expectations with respect to integration or benefits as a result of the contemplated acquisition will materialize.

Additionally, a major asset to be acquired in this contemplated acquisition is Shenandoah’s existing customer relationships. Almost all of Shenandoah’s sales and accounts receivable are concentrated in a very small number of customers. While we believe these relationships will continue and result in profitable sales, there can be no assurance they will.

The anticipated benefits and cost savings of the acquisition may not be realized fully or at all, or may take longer to realize than expected. The integration process could result in the loss of key employees, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies. If the integration is not completed as planned, our ongoing business and financial results may be adversely affected, which could adversely affect our sales, earnings, financial condition and liquidity.

~~Table of Contents~~

Item 6.Exhibits

3.1

~~2.1~~

Asset Purchase Agreement, dated as of September 6, 2017, by and among Hooker Furniture Corporation, Shenandoah Furniture Corporation, Gideon C. Huddle and Candace H. Payne (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K (SEC File No. 000-25349) filed on September 29, 2017)

~~3.1~~

Amended and Restated Articles of Incorporation of the Company, as amended March 28, 2003 (incorporated by reference to Exhibit 3.1 of the Company’s Form 10-Q (SEC File No. 000-25349) for the quarter ended February 28, 2003)


3.2	Amended and Restated Bylaws of the Company, as amended December 10, 2013 (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K (SEC File No. 000-25349) for the year ended February 2, 2014)


4.1	Amended and Restated Articles of Incorporation of the Company, as amended (See Exhibit 3.1)


4.2	Amended and Restated Bylaws of the Company, as amended (See Exhibit 3.2)

	~~10.1~~
31.1*	Second Amended and Restated Loan Agreement, dated as of September 29, 2017, between Bank of America, N.A. and Hooker Furniture Corporation, Bradington-Young, LLC, Sam Moore Furniture LLC and Home Meridian Group, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (SEC File No. 000-25349) filed on September 29, 2017)

31.1*

Rule 13a-14(a) Certification of the Company’s principal executive officer


31.2*	Rule 13a-14(a) Certification of the Company’s principal financial officer


32.1**	Rule 13a-14(b) Certification of the Company’s principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*	Interactive Data Files (formatted as Inline XBRL)

104*	Cover page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

101*

The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended October 29, 2017, formatted in Extensible Business Reporting Language (“XBRL”): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of income, (iii) condensed consolidated statements of comprehensive income, (iv) condensed consolidated statements of cash flows, and (v) the notes to the condensed consolidated financial statements

~~____________~~

*Filed herewith

** Furnished herewith

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~HOOKER FURNITURE CORPORATION~~

	HOOKER FURNITURE CORPORATION

Date: ~~December 8, 2017~~June 10, 2021		By: /s/Paul A. Huckfeldt
		Paul A. Huckfeldt Chief Financial Officer and Senior Vice President – Finance and Accounting

~~Paul A. Huckfeldt~~

~~Chief Financial Officer and~~

~~Senior Vice President – Finance and~~

~~Accounting~~

iso4217:USD xbrli:shares

Fair value estimates of assets acquired and liabilities assumed
Purchase price consideration
Cash paid for assets acquired, including working capital adjustment	$	32,650
Value of shares issued for assets acquired		8,000
Fair value adjustment to shares issued for assets acquired*		396
Total purchase price	$	41,046

Accounts receivable	$	3,576
Inventory		2,380
Prepaid expenses and other current assets		52
Property and equipment		5,418
Intangible assets		13,193
Goodwill		17,645
Accounts payable		(699	)
Accrued expenses		(519	)
Total purchase price	$	41,046

	13 Weeks Ended		39 Weeks Ended
	October 30, 2016		October 30, 2016
	(Pro forma)		(Pro forma)
Net Sales	$	156,570	$	434,921
Net Income	$	7,268	$	16,257
Basic EPS	$	0.63	$	1.41
Diluted EPS	$	0.62	$	1.39

	Pro Forma - Unaudited
	13 Weeks Ended		39 Weeks Ended
	October 29, 2017		October 29, 2017
	(Pro forma)		(Pro forma)
Net Sales	$	165,777	$	474,610
Net Income	$	9,218	$	24,223
Basic EPS	$	0.79	$	2.09
Diluted EPS	$	0.78	$	2.06

Fiscal Year	Amount

Remainder of 2018	$	833
2019		2,263
2020		2,263
2021		2,263
2022		2,263
Thereafter		14,640
	$	24,525

	As of October 29, 2017		%Total			As of January 29, 2017			%Total
Assets			Assets						Assets
Hooker Casegoods	$	125,232		47.5	%	$	130,917			48.6	%
Upholstery		42,636		16.2	%		31,018			11.5	%
Home Meridian		95,483		36.2	%		107,101			39.7	%
All other		509		0.2	%		554			0.2	%
Intercompany eliminations		-		0.0	%		(4	)		0.0	%
Consolidated assets	$	263,860		100.0	%	$	269,586			100	%
Consolidated goodwill and intangibles		78,657					49,110
Total consolidated assets	$	342,517				$	318,696

Unit Volume	FY18 Q3 % Change vs. FY17 Q3			Average Selling Price (ASP)	FY18 Q3 % Change vs. FY17 Q3

Hooker Casegoods		0.3	%	Hooker Casegoods		-0.7	%
Upholstery		42.5	%	Upholstery		-4.9	%
Home Meridian		8.6	%	Home Meridian		-1.7	%
All Other		-12.4	%	All Other		16.2	%
Consolidated		9.1	%	Consolidated		-0.3	%

	Operating Profit and Margin
	Thirteen Weeks Ended
	October 29, 2017					October 30, 2016					$ Change			% Change
			% Net Sales					% Net Sales
Hooker Casegoods	$	3,990		11.0	%	$	5,092		13.8	%	$	(1,102	)		-21.6	%
Upholstery		2,199		8.2	%		1,178		6.0	%		1,021			86.7	%
Home Meridian		4,607		5.0	%		3,503		4.1	%		1,104			31.5	%
All Other		409		14.6	%		165		6.1	%		244			147.9	%
Intercompany Eliminations		-					1					(1	)		-100.0	%
Consolidated	$	11,205		7.1	%	$	9,939		6.8	%	$	1,266			12.7	%

Unit Volume	FY18 YTD % Change vs. FY17 YTD			Average Selling Price (ASP)	FY18 YTD % Change vs. FY17 YTD

Hooker Casegoods		0.5	%	Hooker Casegoods		0.5	%
Upholstery		19.1	%	Upholstery		-2.9	%
Home Meridian		19.3	%	Home Meridian		-5.0	%
All Other		-4.9	%	All Other		12.2	%
Consolidated		16.7	%	Consolidated		-5.3	%

	Estimated Additional Cash Payments Due by Period (In thousands)
	Less than						More than
	1 Year		1-3 Years		3-5 Years		5 years		Total

Long-Term Debt Obligations (1)	$	1,716	$	3,432	$	6,852	$	-	$	12,000
Operating leases (2)		821		1,643		1,643		1,643		5,750


Total contractual cash obligations	$	2,537	$	5,075	$	8,495	$	1,643	$	17,750