Virginia | 54-0251350 |
( State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of Each Class |
Name of Each Exchange o
n Which Registered
|
Common Stock, no par value | NASDAQ Global Select Market |
Large accelerated Filer
o
|
Accelerated Filer
x
|
Non-accelerated Filer
o
|
Smaller reporting company
o
|
|
(Do not check if a smaller reporting company)
|
Common stock, no par value | 10,793,233 |
(Class of common stock) | (Number of shares) |
Part I
|
Page
|
|
Item 1.
|
3
|
|
Item 1A.
|
11
|
|
Item 1B.
|
14
|
|
Item 2.
|
15
|
|
Item 3.
|
15
|
|
Item 4.
|
15
|
|
16
|
||
Part II
|
||
Item 5.
|
17
|
|
Item 6.
|
19
|
|
Item 7.
|
20
|
|
Item 7A.
|
36
|
|
Item 8.
|
36
|
|
Item 9.
|
37
|
|
Item 9A.
|
37
|
|
Item 9B.
|
37
|
|
Part III
|
||
Item 10.
|
38
|
|
Item 11.
|
38
|
|
Item 12.
|
38
|
|
Item 13.
|
38
|
|
Item 14.
|
38
|
|
Part IV
|
||
Item 15.
|
39
|
|
41
|
||
F-1
|
§
|
To offer world-class style, quality and product value as a complete residential wood, metal and upholstered furniture resource through excellence in product design, manufacturing, global sourcing, marketing, logistics, sales and customer service.
|
§
|
To be an industry leader in sales growth and profitability performance, providing an outstanding investment for our shareholders and contributing to the well-being of our employees, customers, suppliers and community.
|
§
|
To nurture the relationship-focused, team-oriented and honor-driven corporate culture that has distinguished our company for over 85 years.
|
2012
|
2011
|
2010
|
||||||||||
Casegoods
|
66 | % | 66 | % | 69 | % | ||||||
Upholstered furniture products
|
34 | % | 34 | % | 31 | % | ||||||
Total
|
100 | % | 100 | % | 100 | % |
§
|
A stacking console program offering three sizes of consoles that may be displayed on retail floors in a pyramid formation to help the retailer maximize sales per square foot, while helping the consumer to easily evaluate size options.
|
§
|
Entertainment consoles with hutches including larger units that have back panels for mounting televisions and smaller units that include stands for smaller televisions.
|
§
|
Gaming consoles designed to accommodate gaming stations like the Sony PlayStation®, Microsoft X-Box®, and the Nintendo Wii®. These units are more casual in design to fit in family rooms, accommodate up to 65” monitors and feature media storage drawers and in some case a speaker compartment.
|
§
|
Home theater and wall units that can accommodate up to 73” televisions, with several styles that fit into large atrium family rooms in suburban homes.
|
§
|
Smaller scaled transitional designs, through our Envision product line, to appeal to more urban, younger consumers. Étagères which flank consoles is an approach also appealing to this consumer.
|
§
|
Hooker continues to be a market leader in full-sized executive office solutions, encompassing 72” to 76” desks and credenza/hutches with bookcases. While growth in home office has slowed slightly with the proliferation of mobile devices, it is still important for consumers who work out of their homes, and Hooker is one of the market share leaders in this category.
|
§
|
Modular home office is a popular category that fits smaller spaces and offers room placement flexibility. A casually-styled October 2011 introduction in this category was especially successful with major retailers and is expected to help maintain this category.
|
§
|
Eclectic smaller desks from 48” to 64”, some with small file drawers, are an important category as many consumers have moved to lap tops, and now to tablets and do not have the need for larger desks.
|
§
|
Larger modular walls like Cherry Creek Collection (introduced in fiscal 2011) featuring bookcases, modular units and an executive desk/credenza/hutch office, along with an entertainment console/hutch which all work together to wrap walls and give the appearance of a built in look at a considerable savings compared to the cost of custom built cabinets.
|
§
|
the ability to offer customized cover-to-frame and fabric-to-frame combinations to the upscale consumer and interior design trade; and,
|
§
|
the ability to offer quick four to six-week product delivery of custom products.
|
§
|
independent furniture retailers such as Furnitureland South of Jamestown/High Point, North Carolina, Mathis Brothers of Oklahoma and California, Baer’s Furniture of South Florida, and Berkshire Hathaway-owned companies Star Furniture, Jordan’s Furniture, Nebraska Furniture Mart and R.C. Willey;
|
§
|
department stores such as Macy’s and Dillard’s;
|
§
|
national membership clubs such as Direct Buy;
|
§
|
regional chain stores such as Raymour & Flanigan (Northeast) and Grand Piano (mid-Atlantic);
|
§
|
lifestyles stores such as Crate & Barrel and Arhaus;
|
§
|
catalog merchandisers such as Ballard Design, Frontgate and the Horchow Collection, a unit of Neiman Marcus; and
|
§
|
E-retailers such as Wayfair.
|
§
|
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, (ii) customers and suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses;
|
§
|
risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the prices and availability of key raw materials as well as transportation, warehousing and domestic labor costs and environmental compliance and remediation costs;
|
§
|
our ability to successfully implement our business plan to increase sales and improve financial performance, including possible adverse effects on our results due to material restructuring or asset impairment charges if we are unsuccessful;
|
§
|
volatility in the increased costs of imported goods, including fluctuations and increases in the prices of purchased finished goods and transportation and warehousing costs;
|
§
|
higher than expected costs associated with product quality and safety, including costs related to defective or non-compliant products as well as regulatory compliance costs related to the sale of consumer products;
|
§
|
the direct and indirect costs associated with the implementation of our Enterprise Resource Planning system, including costs resulting from unanticipated disruptions to our business;
|
§
|
price competition in the furniture industry;
|
§
|
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 the housing markets, consumer confidence, the amount of consumers’ income available for discretionary purchases, and the availability and terms of consumer credit;
|
§
|
supply, transportation and distribution disruptions, particularly those affecting imported products, including the availability of shipping containers and cargo ships;
|
§
|
achieving and managing growth and change, and the risks associated with international operations, acquisitions, restructurings, and strategic alliances;
|
§
|
adverse political acts or developments in, or affecting, the international markets from which we import products, including duties or tariffs imposed on those products;
|
§
|
risks associated with distribution through third-party retailers, such as non-binding dealership arrangements;
|
§
|
capital requirements and costs; and
|
§
|
competition from non-traditional outlets, such as catalogs and internet retailers and home improvement centers; changes in consumer preferences, including increased demand for lower-quality, lower-priced furniture due to declines in consumer confidence and/or discretionary income available for furniture purchases and the availability of consumer credit.
|
§
|
A significant decrease in the market value of the long-lived asset;
|
§
|
A significant adverse change in the extent or manner in which a long-lived asset group is being used, or in its physical condition;
|
§
|
A significant adverse change in the legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator;
|
§
|
An accumulation of costs significantly in excess of the amount originally expected to acquire or construct a long-lived asset;
|
§
|
A current period operating or cash flow loss or a projection or forecast that demonstrates continuing losses associated with the long-lived assets use; and
|
§
|
A current expectation that more-likely-than-not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.
|
§
|
significant capital and administrative expenditures;
|
§
|
disruptions to our domestic and international supply chains;
|
§
|
the inability to fill customer orders;
|
§
|
the inability to process payments to suppliers, vendors and associates accurately and in a timely manner;
|
§
|
the disruption of our internal control structure;
|
§
|
the inability to fulfill our SEC reporting requirements in a timely manner;
|
§
|
the inability to fulfill federal and state tax filing requirements in a timely manner; and
|
§
|
increased demands on management and staff time to the detriment of other corporate initiatives.
|
Name
|
Age
|
Position
|
Year Joined Company
|
||||||
Paul B. Toms, Jr.
|
57 |
Chairman and Chief Executive Officer
|
1983 | ||||||
Paul A. Huckfeldt
|
54 |
Vice President - Finance and Accounting and
|
2004 | ||||||
Chief Financial Officer
|
|||||||||
Alan D. Cole
|
62 |
President - Hooker Furniture
|
2007 | ||||||
Arthur G. Raymond, Jr.
|
64 |
Senior Vice President - Casegoods Operations
|
2010 | ||||||
Michael W. Delgatti, Jr.
|
58 |
President - Hooker Upholstery
|
2009 |
Sales Price Per Share
|
Dividends
|
|||||||||||
High
|
Low
|
Per Share
|
||||||||||
October 31, 2011 - January 29, 2012
|
$ | 12.38 | $ | 9.01 | $ | 0.10 | ||||||
August 1 - October 30, 2011
|
10.86 | 7.96 | 0.10 | |||||||||
May 2 - July 31, 2011
|
12.50 | 8.25 | 0.10 | |||||||||
January 31 - May 1, 2011
|
14.10 | 11.50 | 0.10 | |||||||||
November 1, 2010 - January 30, 2011
|
$ | 14.75 | $ | 10.47 | $ | 0.10 | ||||||
August 2 - October 31, 2010
|
12.41 | 9.22 | 0.10 | |||||||||
May 3 - August 1, 2010
|
17.95 | 10.01 | 0.10 | |||||||||
February 1 - May 2, 2010
|
17.28 | 12.33 | 0.10 |
(1)
|
The graph shows the cumulative total return on $100 invested at the beginning of the measurement period in our common stock or the specified index, including reinvestment of dividends.
|
(2)
|
The Russell 2000
®
Index, prepared by Frank Russell Company, measures the performance of the 2,000 smallest companies out of the 3,000 largest U.S. companies based on total market capitalization.
|
(3)
|
The Household Furniture Index (SIC Codes 2510 and 2511) as prepared by Zacks Investment Research combines all home furnishings companies whose securities are registered with the SEC under the Securities Exchange Act of 1934. On February 14, 2012, Zacks Investment Research reported that the Household Furniture Index consisted of: Bassett Furniture Industries, Inc., Chromcraft Revington, Inc., Ethan Allen Interiors Inc., Flexsteel Industries, Inc., Furniture Brands International, Inc., Hooker Furniture Corporation, La-Z-Boy Incorporated, Natuzzi S.p.A, Tempur Pedic International, Inc., Leggett and Platt, Inc., Sealy Corp., Select Comfort Corp., Krauses Furn., Rowe, Dorel Inds. and Stanley Furniture Company, Inc.
|
Fiscal Year Ended (1)
|
||||||||||||||||||||
January 29,
|
January 30,
|
January 31,
|
February 1,
|
February 3,
|
||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(In thousands, except per share data)
|
||||||||||||||||||||
Income Statement Data:
|
||||||||||||||||||||
Net sales
|
$ | 222,505 | $ | 215,429 | $ | 203,347 | $ | 261,162 | $ | 316,801 | ||||||||||
Cost of sales
|
173,642 | 168,547 | 154,931 | 200,878 | 235,057 | |||||||||||||||
Gross profit
|
48,863 | 46,882 | 48,416 | 60,284 | 81,744 | |||||||||||||||
Selling and adminstrative expenses
|
40,375 | 41,022 | 41,956 | 45,980 | 51,738 | |||||||||||||||
Restructuring charges (credits) (2)
|
- | 1,403 | - | (951 | ) | 309 | ||||||||||||||
Goodwill and intangible asset impairment charges (3)
|
1,815 | 396 | 1,274 | 4,914 | - | |||||||||||||||
Operating income
|
6,673 | 4,061 | 5,186 | 10,341 | 29,697 | |||||||||||||||
Other income (expense), net
|
272 | 108 | (99 | ) | 323 | 1,472 | ||||||||||||||
Income before income taxes
|
6,945 | 4,169 | 5,087 | 10,664 | 31,169 | |||||||||||||||
Income taxes
|
1,888 | 929 | 2,079 | 3,754 | 11,514 | |||||||||||||||
Net income
|
5,057 | 3,240 | 3,008 | 6,910 | 19,655 | |||||||||||||||
Per Share Data:
|
||||||||||||||||||||
Basic and diluted earnings per share
|
$ | 0.47 | $ | 0.30 | $ | 0.28 | $ | 0.62 | $ | 1.58 | ||||||||||
Cash dividends per share
|
0.40 | 0.40 | 0.40 | 0.40 | 0.40 | |||||||||||||||
Net book value per share (4)
|
11.78 | 11.78 | 11.86 | 12.06 | 12.18 | |||||||||||||||
Weighted average shares outstanding (basic)
|
10,762 | 10,757 | 10,753 | 11,060 | 12,442 | |||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 40,355 | $ | 16,623 | $ | 37,995 | $ | 11,804 | $ | 33,076 | ||||||||||
Trade accounts receivable
|
25,807 | 27,670 | 25,894 | 30,261 | 38,229 | |||||||||||||||
Inventories
|
34,136 | 57,438 | 36,176 | 60,248 | 50,560 | |||||||||||||||
Working capital
|
89,534 | 89,297 | 87,894 | 91,261 | 102,307 | |||||||||||||||
Total assets
|
149,171 | 150,411 | 149,099 | 153,467 | 175,232 | |||||||||||||||
Long-term debt (including current maturites)
|
- | - | - | 5,218 | 7,912 | |||||||||||||||
Shareholders' equity
|
127,113 | 126,770 | 127,592 | 129,710 | 140,826 |
(1)
|
Our fiscal years end on the Sunday closest to January 31. The fiscal years presented above all had 52 weeks, except for the fiscal year ended February 3, 2008, which had 53 weeks.
|
(2)
|
We have closed facilities in order to reduce and ultimately eliminate our domestic wood furniture manufacturing capacity and to consolidate our domestic leather upholstered furniture operations. As a result, we recorded restructuring charges and credits, principally for severance and asset impairment, as follows:
|
a)
|
in fiscal 2011 we recorded a charge of $1.4 million pretax ($874,000 after tax, or $0.08 per share) related to the consolidation and transfer of Bradington-Young’s Cherryville, NC manufacturing facility and offices to Hickory, NC;
|
b)
|
in fiscal 2009 we recorded credits of $951,000 pretax ($592,000 after tax, or $0.05 per share) to reverse previously accrued employee benefits and environmental costs not expected to be paid; and
|
c)
|
in fiscal 2008, we recorded charges of $309,000 pretax ($190,000 after tax, or $0.02 per share) principally related to the March 2007 closing and sale of our Martinsville, Va. casegoods manufacturing facility;
|
(3)
|
Based on our annual impairment analyses, we have recorded the following goodwill and intangible asset impairment charges:
|
a)
|
in fiscal 2012, we recorded intangible asset charges of $1.8 million pretax ($1.1 million after tax or $0.10 per share) on our Bradington-Young trade name;
|
b)
|
in fiscal 2011, we recorded intangible asset impairment charges of $396,000 pretax ($247,000 after tax, or $0.02 per share) on our Opus Designs by Hooker Furniture trade name;
|
c)
|
in fiscal 2010, we recorded intangible asset impairment charges of $661,000 pretax ($412,000 after tax, or $0.04 per share) on our Opus Designs by Hooker Furniture trade name and $613,000 pretax ($382,000 after tax, or $0.04 per share) on our Bradington-Young trade name; and
|
d)
|
in fiscal 2009, we recorded intangible asset impairment charges of $3.8 million pretax ($2.5 million after tax, or $0.22 per share), primarily related to the write-off of goodwill resulting from the acquisition of Opus Designs in 2007 and of Bradington-Young in 2003, and $1.1 million ($685,000 after tax, or $0.06) per share to write down the Bradington-Young trade name.
|
(4)
|
Net book value per share is derived by dividing (a) “shareholders’ equity” by (b) the number of common shares issued and outstanding, excluding unearned ESOP and unvested restricted shares, all determined as of the end of each fiscal period.
|
§
|
fifty-two week period that began January 31, 2011 and ended on January 29, 2012 (fiscal 2012);
|
§
|
fifty-two week period that began February 1, 2010 and ended on January 30, 2011 (fiscal 2011); and
|
§
|
fifty-two week period that began February 2, 2009 and ended on January 31, 2010 (fiscal 2010).
|
Fifty-two weeks ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Net sales
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost of sales
|
78.0 | 78.0 | 76.2 | |||||||||
Casualty loss
|
- | 1.0 | - | |||||||||
Insurance recovery
|
- | (0.8 | ) | - | ||||||||
Gross profit
|
22.0 | 21.8 | 23.8 | |||||||||
Selling and administrative expenses
|
18.1 | 19.0 | 20.6 | |||||||||
Restructuring charges
|
- | 0.7 | 0.0 | |||||||||
Intangible asset impairment charges
|
0.8 | 0.2 | 0.6 | |||||||||
Operating income
|
3.0 | 1.9 | 2.6 | |||||||||
Other income (expense), net
|
0.1 | 0.1 | (0.1 | ) | ||||||||
Income before income taxes
|
3.1 | 1.9 | 2.5 | |||||||||
Income taxes
|
0.8 | 0.4 | 1.0 | |||||||||
Net income
|
2.3 | 1.5 | 1.5 |
Net Sales
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 29, 2012
|
% Net Sales |
January 30, 2011
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
|
|
|||||||||||||||||||||||
Casegoods
|
$ | 147,927 | 66.5 | % | $ | 143,157 | 66.5 | % | $ | 4,770 | 3.3 | % | ||||||||||||
Upholstery
|
74,578 | 33.5 | % | 72,272 | 33.5 | % | $ | 2,306 | 3.2 | % | ||||||||||||||
Consolidated
|
$ | 222,505 | 100.0 | % | $ | 215,429 | 100.0 | % | $ | 7,076 | 3.3 | % |
Unit Volume
|
FY12 %
Increase
vs. PY
|
Average Selling Price
|
FY12 %
Increase
vs. PY
|
|||||||
Casegoods
|
1.4 | % |
Casegoods
|
2.1 | % | |||||
Upholstery
|
1.3 | % |
Upholstery
|
3.4 | % | |||||
Consolidated
|
1.4 | % |
Consolidated
|
2.5 | % |
Gross Income and Margin
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 29, 2012
|
% Net Sales |
January 30, 2011
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Casegoods
|
$ | 37,550 | 25.4 | % | $ | 37,642 | 26.3 | % | $ | (92 | ) | -0.2 | % | |||||||||||
Upholstery
|
11,313 | 15.2 | % | 9,240 | 12.8 | % | 2,073 | 22.4 | % | |||||||||||||||
Consolidated
|
$ | 48,863 | 22.0 | % | $ | 46,882 | 21.8 | % | $ | 1,981 | 4.2 | % |
Selling and Administrative Expenses
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 29, 2012
|
% Net Sales |
January 30, 2011
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Casegoods
|
$ | 26,905 | 18.2 | % | $ | 27,897 | 19.5 | % | $ | (992 | ) | -3.6 | % | |||||||||||
Upholstery
|
13,470 | 18.1 | % | 13,125 | 18.2 | % | 345 | 2.6 | % | |||||||||||||||
Consolidated
|
$ | 40,375 | 18.1 | % | $ | 41,022 | 19.0 | % | $ | (647 | ) | -1.6 | % |
§
|
Lower salary related costs, due to:
|
o
|
an insurance gain of $610,000 on Company-owned life insurance due to the death of a former executive during the fiscal 2012 first quarter;
|
o
|
realignments in our officer group; and
|
o
|
the reversal of an accrual for long-term incentive compensation during the first quarter of fiscal 2012;
|
§
|
Lower advertising supplies expense and sample expense, due to cost reduction measures;
|
§
|
Lower depreciation and amortization expense primarily due to decreased information systems spending on our legacy systems in anticipation of the implementation of our current ERP project; and
|
§
|
Lower bad debt expense due to adjustments in our accounts receivable reserves to reflect favorable collection trends.
|
§
|
Increased commissions and sales incentives due to higher sales and initiatives to drive sales volume growth;
|
§
|
A charge to write down leasehold improvements related to the relocation and consolidation of our showroom space at the International Home Furnishings Center; and
|
§
|
Increased sample expense incurred for swatches for new leather and fabric upholstery offerings.
|
Operating Margin
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 29, 2012
|
% Net Sales |
January 30, 2011
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Casegoods
|
$ | 10,644 | 7.2 | % | $ | 9,348 | 6.5 | % | $ | 1,296 | 13.9 | % | ||||||||||||
Upholstery
|
(3,971 | ) | -5.3 | % | (5,287 | ) | -7.3 | % | 1,316 | 24.9 | % | |||||||||||||
Consolidated
|
$ | 6,673 | 3.0 | % | $ | 4,061 | 1.9 | % | $ | 2,612 | 64.3 | % |
Other income, net
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 29, 2012
|
% Net Sales |
January 30, 2011
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Casegoods
|
$ | 755 | 0.5 | % | $ | 625 | 0.5 | % | $ | 130 | 20.8 | % | ||||||||||||
Upholstery
|
(483 | ) | -0.7 | % | (517 | ) | -0.7 | % | 34 | 6.6 | % | |||||||||||||
Consolidated
|
$ | 272 | 0.1 | % | $ | 108 | 0.1 | % | $ | 164 | 151.9 | % |
Income taxes
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 29, 2012
|
% Net Sales |
January 30, 2011
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Consolidated income tax expense
|
$ | 1,888 | 0.8 | % | $ | 929 | 0.4 | % | $ | 959 | 103.2 | % | ||||||||||||
Effective Tax Rate
|
27.2 | % | 22.3 | % |
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 29, 2012
|
% Net Sales |
January 30, 2011
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Net Income
|
||||||||||||||||||||||||
Consolidated
|
$ | 5,057 | 2.3 | % | $ | 3,240 | 1.5 | % | $ | 1,818 | 56.1 | % | ||||||||||||
Earnings per share
|
$ | 0.47 | $ | 0.30 |
Net Sales | |||||||||||||||||||
Fifty-two weeks ended
|
|||||||||||||||||||
January 30, 2011
|
January 31, 2010
|
$ Change
|
% Change
|
||||||||||||||||
% Net Sales
|
% Net Sales
|
||||||||||||||||||
Casegoods
|
$ | 143,157 | 66.5 | % | $ | 140,365 | 69.0 | % | $ | 2,792 | 2.0 | % | |||||||
Upholstery
|
72,272 | 33.5 | % | 62,982 | 31.0 | % | $ | 9,290 | 14.8 | % | |||||||||
Consolidated
|
$ | 215,429 | 100 | % | $ | 203,347 | 100 | % | $ | 12,082 | 5.9 | % | |||||||
Unit Volume
|
FY11 %
Increase
(decrease)
vs. PY
|
Average Selling Price
|
FY11 %
Increase
(decrease)
vs. PY
|
||||||
Casegoods
|
3.6 | % |
Casegoods
|
-3.0 | % | ||||
Upholstery
|
22.0 | % |
Upholstery
|
-4.4 | % | ||||
Consolidated
|
7.9 | % |
Consolidated
|
-2.4 | % |
Gross Margin
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 30, 2011
|
% Net Sales |
January 31, 2010
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Casegoods
|
$ | 37,642 | 26.3 | % | $ | 40,704 | 29.0 | % | $ | (3,062 | ) | -7.5 | % | |||||||||||
Upholstery
|
9,240 | 12.8 | % | 7,712 | 12.2 | % | 1,528 | 19.8 | % | |||||||||||||||
Consolidated
|
$ | 46,882 | 21.8 | % | $ | 48,416 | 23.8 | % | $ | (1,534 | ) | -3.2 | % |
§
|
increased freight costs on imported products and
|
§
|
a $500,000 net charge to casegoods cost of sales for our insurance deductible paid in connection with a distribution center fire in fiscal 2011,
|
§
|
partially offset by lower product discounting, lower returns and allowances and cost savings from the exit from our California warehouse in fiscal 2010.
|
§
|
manufacturing efficiencies due to increased production rates and
|
§
|
cost reduction initiatives;
|
§
|
partially offset by higher raw material and manufacturing costs as a percentage of sales.
|
Selling and Administrative Expenses
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 30, 2011
|
% Net Sales |
January 31, 2010
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Casegoods
|
$ | 27,897 | 19.5 | % | $ | 28,995 | 20.7 | % | $ | (1,098 | ) | -3.8 | % | |||||||||||
Upholstery
|
13,125 | 18.2 | % | 12,961 | 20.6 | % | 164 | 1.3 | % | |||||||||||||||
Consolidated
|
$ | 41,022 | 19.0 | % | $ | 41,956 | 20.6 | % | $ | (934 | ) | -2.2 | % |
§
|
lower professional services expense due to cost cutting measures and
|
§
|
lower bad debts expense due to favorable collection trends.
|
§
|
increased salaries and wages expense due primarily to transfers of employees into selling and administrative salaries and wages from other internal cost centers, and, to a lesser extent, overtime in upholstery product development; and
|
§
|
increased commission expense due to higher sales in the 2011 fiscal period.
|
Restructuring and intangible asset impairment charges
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 30, 2011
|
% Net Sales |
January 31, 2010
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Casegoods
|
$ | 396 | 0.2 | % | $ | 661 | 0.3 | % | $ | (265 | ) | -40.1 | % | |||||||||||
Upholstery
|
1,403 | 0.7 | % | 613 | 0.3 | % | 790 | 128.9 | % | |||||||||||||||
Consolidated
|
$ | 1,799 | 0.9 | % | $ | 1,274 | 0.6 | % | $ | 525 | 41.2 | % |
§
|
the write-down of our Opus Designs by Hooker trade name ($396,000 pretax, $247,000 after tax, or $0.02 per share recorded in our casegoods segment); and
|
§
|
the consolidation of Bradington-Young’s Cherryville, NC manufacturing facility and offices to Hickory, NC ($1.4 million, pretax, $874,000 after tax or $0.08 per share recorded in our upholstery segment).
|
Operating Margin
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 30, 2011
|
% Net Sales |
January 31, 2010
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Casegoods
|
$ | 9,348 | 6.5 | % | $ | 11,048 | 7.9 | % | $ | (1,700 | ) | -15.4 | % | |||||||||||
Upholstery
|
(5,287 | ) | -7.3 | % | (5,862 | ) | -9.3 | % | 575 | -9.8 | % | |||||||||||||
Consolidated
|
$ | 4,061 | 1.9 | % | $ | 5,186 | 2.6 | % | $ | (1,125 | ) | -21.7 | % |
§
|
the previously mentioned increase in freight costs on imported products and the $500,000 casualty loss charge for a warehouse fire in our casegoods segment, and
|
§
|
restructuring and intangible asset impairment charges in both our casegoods and upholstery segments.
|
Other income, net
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 30, 2011
|
% Net Sales |
January 31, 2010
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Casegoods
|
$ | 625 | 0.5 | % | $ | 414 | 0.5 | % | $ | 211 | 51.0 | % | ||||||||||||
Upholstery
|
(517 | ) | -0.7 | % | (513 | ) | 0.6 | % | (4 | ) | 0 | |||||||||||||
Consolidated
|
$ | 108 | 0.1 | % | $ | (99 | ) | -0.1 | % | $ | 207 | 209.1 | % |
Income taxes
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 30, 2011
|
% Net Sales |
January 31, 2010
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Consolidated Income Tax Expense
|
$ | 929 | 0.4 | % | $ | 2,079 | 1.0 | % | $ | (1,150 | ) | -55.3 | % | |||||||||||
Effective Tax Rate
|
22.3 | % | 40.9 | % |
§
|
the reversal of two federal income tax penalties that had been accrued or paid in prior years;
|
§
|
the establishment of a valuation allowance against certain state loss carry forwards that occurred in fiscal 2010;
|
§
|
a smaller amount of subpart F income required to be included in income in fiscal 2011;
|
§
|
a distribution from our captive insurance subsidiary, which was treated as income for financial reporting purposes but was a return of capital for tax purposes, and
|
§
|
an increase in the tax benefit related to Company-owned life insurance policies.
|
Net Income
|
||||||||||||||||||||||||
Fifty-two weeks ended
|
||||||||||||||||||||||||
January 30, 2011
|
% Net Sales |
January 31, 2010
|
% Net Sales |
$ Change
|
% Change
|
|||||||||||||||||||
Consolidated Net Income
|
$ | 3,240 | 1.5 | % | $ | 3,008 | 1.5 | % | $ | 232 | 7.7 | % | ||||||||||||
Earnings per share
|
$ | 0.30 | $ | 0.28 |
Balance Sheet and Working Capital
|
||||||||||||
January 29, 2012
|
January 30, 2011
|
$ Change
|
||||||||||
Total Assets
|
$ | 149,171 | $ | 150,411 | $ | (1,240 | ) | |||||
Cash
|
$ | 40,355 | $ | 16,623 | $ | 23,732 | ||||||
Trade Receivables
|
25,807 | 27,670 | (1,863 | ) | ||||||||
Inventories
|
34,136 | 57,438 | (23,302 | ) | ||||||||
Prepaid Expenses & Other
|
4,194 | 4,965 | (771 | ) | ||||||||
Total Current Assets
|
$ | 104,492 | $ | 106,696 | $ | (2,204 | ) | |||||
Trade accounts payable
|
$ | 9,233 | $ | 11,785 | $ | (2,552 | ) | |||||
Accrued salaries, wages and benefits
|
3,855 | 3,426 | 429 | |||||||||
Other accrued epenses
|
1,870 | 2,188 | (318 | ) | ||||||||
Total current liabilities
|
$ | 14,958 | $ | 17,399 | $ | (2,441 | ) | |||||
Net working capital
|
$ | 89,534 | $ | 89,297 | $ | 237 | ||||||
Working capital ratio
|
7.0 to 1
|
6.1 to 1
|
§
|
decreased inventories due to a concerted effort to reduce excess inventory;
|
§
|
decreased prepaid expenses and other due to decreases in deferred taxes, and
|
§
|
decreased in trade receivables due to lower sales near the end of the fiscal year.
|
§
|
increased cash balances; and
|
§
|
decreased trade accounts payable due to lower inventory purchases.
|
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Net cash provided by (used in) operating activities
|
$ | 32,276 | $ | (15,459 | ) | $ | 36,846 | |||||
Net cash used in investing activities
|
(4,229 | ) | (1,601 | ) | (1,128 | ) | ||||||
Net cash used in financing activities
|
(4,315 | ) | (4,312 | ) | (9,527 | ) | ||||||
Net increase (decrease) in cash and cash equivalents
|
$ | 23,732 | $ | (21,372 | ) | $ | 26,191 |
§
|
a $15.0 million unsecured revolving credit facility, up to $3.0 million of which can be used to support letters of credit;
|
§
|
a floating interest rate, adjusted monthly, based on LIBOR, plus an applicable margin based on the ratio of our funded debt to EBITDA (each as defined in the agreement);
|
§
|
a quarterly unused commitment fee, based on our ratio of funded debt to EBITDA; and
|
§
|
no pre-payment penalty.
|
§
|
Maintain a tangible net worth of at least $108.0 million;
|
§
|
Limit capital expenditures to no more than $15.0 million during any fiscal year; and
|
§
|
Maintain a ratio of funded debt to EBITDA not exceeding 2.0:1.0.
|
§
|
factoring allows us to outsource the administrative burden of credit and collections functions for our upholstery operations;
|
§
|
factoring allows us to transfer the collection risk associated with the majority of our domestic upholstery receivables to the factor; and
|
§
|
factoring provides us with an additional, potential source of short-term liquidity.
|
Cash Payments Due by Period (In thousands)
|
||||||||||||||||||||
Less than
|
More than
|
|||||||||||||||||||
1 Year
|
1-3 Years
|
3-5 Years
|
5 years
|
Total
|
||||||||||||||||
Deferred compensation payments
(1)
|
$ | 469 | $ | 1,305 | $ | 1,426 | $ | 8,896 | $ | 12,096 | ||||||||||
Operating leases
(2)
|
1,270 | 1,980 | 601 | - | 3,851 | |||||||||||||||
Other long-term obligations
(3)
|
1,466 | 681 | 36 | - | 2,183 | |||||||||||||||
Total contractual cash obligations
|
$ | 3,205 | $ | 3,966 | $ | 2,063 | $ | 8,896 | $ | 18,130 |
(1)
|
These amounts represent estimated cash payments to be paid to participants in our supplemental retirement income plan or “SRIP” through fiscal year 2038, which is 15 years after the last current SRIP participant is assumed to have retired. The present value of these benefits (the actuarially derived projected benefit obligation for this plan) was approximately $7.6 million at January 29, 2012 and is shown on our consolidated balance sheets, with $469,000 recorded in current liabilities and $7.1 million recorded in long-term liabilities. In addition, the monthly retirement benefit for each participant, regardless of age, would become fully vested and the present value of that benefit would be paid to each participant in a lump sum upon a change in control of the Company as defined in the plan. See note 10 to the consolidated financial statements beginning on page F- 16 for additional information about the SRIP.
|
(2)
|
These amounts represent estimated cash payments due under operating leases for various office equipment, warehouse equipment and real estate utilized in our operations. See Item 2 “Properties,” for a description of our leased real estate.
|
(3)
|
These amounts represent estimated cash payments due under various long-term service and support agreements, for items such as warehouse management services, information technology support and human resources related consulting and support.
|
§
|
Continue to develop the “right” product, in other words, the product the consumer wants at a price they are willing to pay;
|
§
|
Align our import supplier base with our product standards for quality, delivery, value and cost by:
|
□
|
continuing to develop existing successful supplier relationships,
|
□
|
exiting non-compliant suppliers for more promising supplier relationships in existing or new locales, and
|
□
|
developing our Asian supply-team to reduce product quality issues and costs.
|
§
|
Achieve upholstery segment profitability;
|
§
|
Build on fiscal 2012 casegoods volume and profitability increases; and
|
§
|
Implement our corporate Enterprise Resource Planning system for our casegoods segment and substantially complete ERP implementation for our upholstery segment.
|
§
|
Develop the right product by continuing the collaboration between experienced merchants and younger members of our design team. In fiscal 2012, this collaboration resulted in a Pinnacle Design Award from the American Society of Furniture Designers and several Pinnacle Award nominations;
|
§
|
Better align our supplier base with our product standards for quality, delivery, value and cost by building on the strengths of our Asian supply team through the effort of our new Vice President -Asian Operations, a seasoned sourcing executive with a record of success and by continuing to leverage our existing successful supplier relationships;
|
§
|
Achieve upholstery segment profitability through volume increases driven by:
|
□
|
introducing new product lines and categories,
|
□
|
building on the success of our Bradington-Young division’s “comfort@home” in-store gallery program and whole-home collections like Harbor Pointe and Primrose Hill, which include both casegoods and upholstery, and
|
□
|
continued focus on critical cost reduction projects;
|
§
|
Build on fiscal 2012 casegoods volume and profitability increases by continued focus on offering strong product lines, reducing discounting through improved inventory management and growing our international business; and
|
§
|
Implement our ERP system for our case goods division during FY 2013 and leverage our current progress and the knowledge of our associates and implementation partner to substantially complete the ERP implementation for our upholstery segment.
|
§
|
A significant decrease in the market value of the long-lived asset;
|
§
|
A significant adverse change in the extent or manner in which a long-lived asset group is being used, or in its physical condition;
|
§
|
A significant adverse change in the legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator;
|
§
|
An accumulation of costs significantly in excess of the amount originally expected to acquire or construct a long-lived asset;
|
§
|
A current period operating or cash flow loss or a projection or forecast that demonstrates continuing losses associated with the long-lived assets use; and
|
§
|
A current expectation that more-likely-than-not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.
|
§
|
a significant adverse change in the economic or business climate either within the furniture industry or the national or global economy;
|
§
|
significant changes in demand for our products;
|
§
|
loss of key personnel; and
|
§
|
the likelihood that a reporting unit or significant portion of a reporting unit will be sold or otherwise disposed of.
|
HOOKER FURNITURE CORPORATION | |||
Date April 12, 2012
|
By:
|
/s/ Paul B. Toms, Jr. | |
Paul B. Toms, Jr. | |||
Chairman and Chief Executive Officer | |||
Signature
|
Title
|
Date
|
||
/s/ Paul B. Toms, Jr.
|
Chairman, Chief Executive Officer and
|
April 12, 2012
|
||
Paul B. Toms, Jr.
|
Director (Principal Executive Officer)
|
|||
/s/ Paul A. Huckfeldt
|
Vice President - Finance and Accounting
|
April 12, 2012
|
||
Paul A. Huckfeldt
|
and Chief Financial Officer (Principal Accounting Officer)
|
|||
/s/ W. Christopher Beeler, Jr.
|
Director
|
April 12, 2012
|
||
W. Christopher Beeler, Jr.
|
||||
/s/ John L. Gregory, III
|
Director
|
April 12, 2012
|
||
John L. Gregory, III
|
||||
/s/ E. Larry Ryder
|
Director
|
April 12, 2012
|
||
E. Larry Ryder
|
||||
/s/ Mark F. Schreiber
|
Director
|
April 12, 2012
|
||
Mark F. Schreiber
|
||||
/s/ David G. Sweet
|
Director
|
April 12, 2012
|
||
David G. Sweet
|
||||
/s/ Henry G. Williamson, Jr.
|
Director
|
April 12, 2012
|
||
Henry G. Williamson, Jr.
|
Page
|
|
F-2
|
|
F-3
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
|
F-9
|
As of
|
January 29,
|
January 30,
|
||||||
2012
|
2011
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 40,355 | $ | 16,623 | ||||
Trade accounts receivable, less allowance for doubtful
accounts of
$1,632
and $2,082 on each respective date
|
25,807 | 27,670 | ||||||
Inventories
|
34,136 | 57,438 | ||||||
Prepaid expenses and other current assets
|
4,194 | 4,965 | ||||||
Total current assets
|
104,492 | 106,696 | ||||||
Property, plant and equipment, net
|
21,669 | 20,663 | ||||||
Intangible assets
|
1,257 | 3,072 | ||||||
Cash surrender value of life insurance policies
|
16,217 | 15,026 | ||||||
Other assets
|
5,536 | 4,954 | ||||||
Total assets
|
$ | 149,171 | $ | 150,411 | ||||
Liabilities and Shareholders’ Equity
|
||||||||
Current liabilities
|
||||||||
Trade accounts payable
|
$ | 9,233 | $ | 11,785 | ||||
Accrued salaries, wages and benefits
|
3,855 | 3,426 | ||||||
Other accrued expenses
|
792 | 1,111 | ||||||
Accrued dividends
|
1,078 | 1,077 | ||||||
Total current liabilities
|
14,958 | 17,399 | ||||||
Deferred compensation
|
7,100 | 6,242 | ||||||
Total liabilities
|
22,058 | 23,641 | ||||||
Shareholders’ equity
|
||||||||
Common stock, no par value,
20,000
shares authorized,
10,793
and 10,782
shares issued and outstanding on each date
|
17,262 | 17,161 | ||||||
Retained earnings
|
109,742 | 109,000 | ||||||
Accumulated other comprehensive income
|
109 | 609 | ||||||
Total shareholders’ equity
|
127,113 | 126,770 | ||||||
Total liabilities and shareholders’ equity
|
$ | 149,171 | $ | 150,411 |
For The Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Net sales
|
$ | 222,505 | $ | 215,429 | $ | 203,347 | ||||||
Cost of sales
|
173,642 | 168,047 | 154,931 | |||||||||
Casualty loss
|
- | 2,208 | - | |||||||||
Insurance recovery
|
- | (1,708 | ) | - | ||||||||
Total cost of sales
|
173,642 | 168,547 | 154,931 | |||||||||
Gross profit
|
48,863 | 46,882 | 48,416 | |||||||||
Selling and administrative expenses
|
40,375 | 41,022 | 41,956 | |||||||||
Restructuring charges
|
- | 1,403 | - | |||||||||
Intangible asset impairment charges
|
1,815 | 396 | 1,274 | |||||||||
Operating income
|
6,673 | 4,061 | 5,186 | |||||||||
Other income (expense), net
|
272 | 108 | (99 | ) | ||||||||
Income before income taxes
|
6,945 | 4,169 | 5,087 | |||||||||
Income taxes
|
1,888 | 929 | 2,079 | |||||||||
Net income
|
$ | 5,057 | $ | 3,240 | $ | 3,008 | ||||||
Earnings per share:
|
||||||||||||
Basic and diluted
|
$ | 0.47 | $ | 0.30 | $ | 0.28 | ||||||
Weighted average shares outstanding:
|
||||||||||||
Basic
|
10,762 | 10,757 | 10,753 | |||||||||
Diluted
|
10,790 | 10,770 | 10,760 | |||||||||
Cash dividends declared per share
|
$ | 0.40 | $ | 0.40 | $ | 0.40 |
For The
|
||||||||||||
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Cash flows from operating activities
|
||||||||||||
Cash received from customers
|
$ | 224,577 | $ | 213,850 | $ | 207,819 | ||||||
Cash paid to suppliers and employees
|
(190,365 | ) | (226,986 | ) | (169,245 | ) | ||||||
Insurance proceeds received on casualty loss
|
- | 1,708 | - | |||||||||
Income taxes paid, net
|
(1,987 | ) | (3,938 | ) | (1,401 | ) | ||||||
Interest received (paid), net
|
51 | (93 | ) | (327 | ) | |||||||
Net cash provided by/(used in) operating activites
|
32,276 | (15,459 | ) | 36,846 | ||||||||
Cash flows from investing activities
|
||||||||||||
Purchases of property, plant, and equipment
|
(3,805 | ) | (2,010 | ) | (1,678 | ) | ||||||
Proceeds received on notes receivable
|
35 | 31 | 30 | |||||||||
Proceeds from the sale of property and equipment
|
125 | - | 337 | |||||||||
Premiums paid on life insurance policies
|
(1,144 | ) | (1,346 | ) | (556 | ) | ||||||
Proceeds received on life insurance policies
|
560 | 1,724 | 739 | |||||||||
Net cash used in investing activities
|
(4,229 | ) | (1,601 | ) | (1,128 | ) | ||||||
Cash flows from financing activities
|
||||||||||||
Proceeds from short-term borrowing
|
- | - | 4,859 | |||||||||
Payments on short-term debt
|
- | - | (4,859 | ) | ||||||||
Cash dividends paid
|
(4,315 | ) | (4,312 | ) | (4,309 | ) | ||||||
Payments on long-term debt
|
- | - | (5,218 | ) | ||||||||
Net cash used in financing activities
|
(4,315 | ) | (4,312 | ) | (9,527 | ) | ||||||
Net increase (decrease) in cash and cash equivalents
|
23,732 | (21,372 | ) | 26,191 | ||||||||
Cash and cash equivalents at the beginning of the year
|
16,623 | 37,995 | 11,804 | |||||||||
Cash and cash equivalents at the end of the year
|
$ | 40,355 | $ | 16,623 | $ | 37,995 | ||||||
Reconciliation of net income to net cash provided by / (used in)
operating activities:
|
||||||||||||
Net income
|
$ | 5,057 | $ | 3,240 | $ | 3,008 | ||||||
Depreciation and amortization
|
2,566 | 2,848 | 3,125 | |||||||||
Non-cash restricted stock awards
|
(38 | ) | 225 | 81 | ||||||||
Asset impairment charges
|
1,815 | 396 | 1,274 | |||||||||
Restructuring charge
|
- | 1,403 | - | |||||||||
Loss on disposal of property
|
108 | 118 | 133 | |||||||||
Provision for doubtful accounts
|
361 | 674 | 1,361 | |||||||||
Gain on life insurance policies
|
(565 | ) | (577 | ) | (579 | ) | ||||||
Deferred income taxes
|
(36 | ) | (1,872 | ) | 239 | |||||||
Changes in assets and liabilities:
|
||||||||||||
Trade accounts receivable
|
1,502 | (2,451 | ) | 3,007 | ||||||||
Inventories
|
23,302 | (21,262 | ) | 24,072 | ||||||||
Prepaid expenses and other current assets
|
451 | (185 | ) | (1,054 | ) | |||||||
Trade accounts payable
|
(2,552 | ) | 1,360 | 2,033 | ||||||||
Accrued salaries, wages, and benefits
|
429 | 967 | (34 | ) | ||||||||
Accrued income taxes
|
(63 | ) | (1,136 | ) | 253 | |||||||
Other accrued expenses
|
(256 | ) | 293 | (579 | ) | |||||||
Deferred compensation
|
195 | 500 | 322 | |||||||||
Other long-term liabilities
|
- | - | 184 | |||||||||
Net cash provided by/(used in) operating activities
|
$ | 32,276 | $ | (15,459 | ) | $ | 36,846 |
For the Fifty-Two Week Periods Ended January 31, 2010, January 30, 2011 and January 29, 2012
|
||||||||||||||||||||
Accumulated | ||||||||||||||||||||
Other
|
Total
|
|||||||||||||||||||
Common Stock
|
Retained
|
Comprehensive
|
Shareholders'
|
|||||||||||||||||
Shares
|
Amount
|
Earnings
|
Income (Loss)
|
Equity
|
||||||||||||||||
Balance at February 1, 2009
|
10,772 | $ | 16,995 | $ | 112,450 | $ | 265 | $ | 129,710 | |||||||||||
Net income
|
- | - | 3,008 | - | 3,008 | |||||||||||||||
Reclassifications due to ineffective interest rate swap
|
142 | 142 | ||||||||||||||||||
Unrealized gain on deferred compensation
|
- | - | - | 36 | 36 | |||||||||||||||
Total comprehensive income
|
3,186 | |||||||||||||||||||
Cash dividends paid and accrued ($0.40 per share)
|
- | - | (5,385 | ) | - | (5,385 | ) | |||||||||||||
Restricted stock grants, net of forfeitures
|
3 | - | - | - | - | |||||||||||||||
Restricted stock compensation cost
|
- | 81 | - | - | 81 | |||||||||||||||
Balance at January 31, 2010
|
10,775 | $ | 17,076 | $ | 110,073 | $ | 443 | $ | 127,592 | |||||||||||
Net income
|
- | - | 3,240 | - | 3,240 | |||||||||||||||
Unrealized gain on deferred compensation
|
- | - | - | 166 | 166 | |||||||||||||||
Total comprehensive income
|
3,406 | |||||||||||||||||||
Cash dividends paid and accrued ($0.40 per share)
|
- | - | (4,312 | ) | - | (4,312 | ) | |||||||||||||
Restricted stock grants, net of forfeitures
|
7 | - | - | - | - | |||||||||||||||
Restricted stock compensation cost
|
- | 85 | - | - | 85 | |||||||||||||||
Balance at January 30, 2011
|
10,782 | $ | 17,161 | $ | 109,000 | $ | 609 | $ | 126,770 | |||||||||||
Net income
|
- | - | 5,057 | - | 5,057 | |||||||||||||||
Unrealized loss on deferred compensation
|
- | - | - | (500 | ) | (500 | ) | |||||||||||||
Total comprehensive income
|
4,557 | |||||||||||||||||||
Cash dividends paid and accrued ($0.40 per share)
|
- | - | (4,315 | ) | - | (4,315 | ) | |||||||||||||
Restricted stock grants, net of forfeitures
|
11 | - | - | - | - | |||||||||||||||
Restricted stock compensation cost
|
- | 101 | - | - | 101 | |||||||||||||||
Balance at January 29, 2012
|
10,793 | $ | 17,262 | $ | 109,742 | $ | 109 | $ | 127,113 |
§
|
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
|
§
|
Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
|
§
|
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
|
§
|
a significant adverse change in the economic or business climate either within the furniture industry or the national or global economy;
|
§
|
significant changes in demand for our products;
|
§
|
loss of key personnel; or
|
§
|
the likelihood that a reporting unit or significant portion of a reporting unit will be sold or otherwise disposed of.
|
§
|
raw materials and supplies used in our domestically manufactured products,
|
§
|
labor, utility and overhead costs associated with our domestically manufactured products,
|
§
|
the cost of imported products purchased for resale,
|
§
|
the cost of our foreign import operations,
|
§
|
charges or credits associated with our inventory reserves,
|
§
|
warehousing and certain shipping and handling costs, and
|
§
|
all other costs required to be classified as cost of sales.
|
§
|
the cost of our marketing and merchandising efforts, including showroom expenses,
|
§
|
sales and designs commissions,
|
§
|
the costs of administrative support functions including, executive management, information technology, human resources, finance, and
|
§
|
all other costs required to be classified as selling and administrative expenses.
|
§
|
2012 fiscal year and comparable terminology mean the fiscal year that began January 31, 2011 and ended January 29, 2012;
|
§
|
2011 fiscal year and comparable terminology mean the fiscal year that began February 1, 2010 and ended January 30, 2011; and
|
§
|
2010 fiscal year and comparable terminology mean the fiscal year that began February 2, 2009 and ended January 31, 2010.
|
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Balance at beginning of year
|
$ | 2,082 | $ | 1,938 | $ | 2,207 | ||||||
Non-cash charges to cost and expenses
|
361 | 674 | 1,361 | |||||||||
Less uncollectible receivables written off, net of recoveries
|
(811 | ) | (530 | ) | (1,630 | ) | ||||||
Balance at end of year
|
$ | 1,632 | $ | 2,082 | $ | 1,938 |
January 29,
|
January 30,
|
|||||||
2012
|
2011
|
|||||||
Trade accounts receivable
|
$ | 21,261 | $ | 24,540 | ||||
Receivable from factor
|
6,178 | 5,212 | ||||||
Allowance for doubtful accounts
|
(1,632 | ) | (2,082 | ) | ||||
Accounts receivable
|
$ | 25,807 | $ | 27,670 |
January 29,
|
January 30,
|
|||||||
2012
|
2011
|
|||||||
Finished furniture
|
$ | 42,656 | $ | 63,201 | ||||
Furniture in process
|
580 | 639 | ||||||
Materials and supplies
|
7,942 | 9,065 | ||||||
Inventories at FIFO
|
51,178 | 72,905 | ||||||
Reduction to LIFO basis
|
(17,042 | ) | (15,467 | ) | ||||
Inventories
|
$ | 34,136 | $ | 57,438 |
Depreciable Lives
|
January 29,
|
January 30,
|
||||||||||
(In years)
|
2012
|
2011
|
||||||||||
Buildings and land improvements
|
15 - 30 | $ | 24,501 | $ | 23,784 | |||||||
Machinery and equipment
|
10 | 3,708 | 3,469 | |||||||||
Furniture and fixtures
|
3 - 8 | 28,000 | 27,615 | |||||||||
Other
|
5 | 1,540 | 4,163 | |||||||||
Total depreciable property at cost
|
57,749 | 59,031 | ||||||||||
Less accumulated depreciation
|
41,117 | 41,169 | ||||||||||
Total depreciable property, net
|
16,632 | 17,862 | ||||||||||
Land
|
1,357 | 1,357 | ||||||||||
Construction in progress
|
3,680 | 1,444 | ||||||||||
Property, plant and equipment, net
|
$ | 21,669 | $ | 20,663 |
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Balance beginning of year
|
$ | 1,519 | $ | 2,493 | $ | 2,863 | ||||||
Purchases
|
11 | 63 | 868 | |||||||||
Amortization expense
|
(912 | ) | (1,037 | ) | (1,230 | ) | ||||||
Disposals
|
(8 | ) | ||||||||||
Balance end of year
|
$ | 618 | $ | 1,519 | $ | 2,493 |
January 29,
|
January 30,
|
||||||||
Segment
|
2012
|
2011
|
|||||||
Non-amortizable Intangible Assets
|
|||||||||
Trademarks and trade names - Bradington-Young
|
Upholstery
|
$ | 861 | $ | 2,676 | ||||
Trademarks and trade names - Sam Moore
|
Upholstery
|
396 | 396 | ||||||
Total trademarks and trade names
|
1,257 | 3,072 |
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Trade name impairment charges:
|
||||||||||||
Opus Designs by Hooker Furniture
|
$ | - | $ | 396 | $ | 661 | ||||||
Bradington-Young
|
1,815 | - | 613 | |||||||||
Total trade name impairment
|
$ | 1,815 | $ | 396 | $ | 1,274 |
§
|
A $15.0 million unsecured revolving credit facility, up to $3.0 million of which can be used to support letters of credit;
|
§
|
A floating interest rate, adjusted monthly, based on LIBOR, plus an applicable margin based on the ratio of our funded debt to our EBITDA (each as defined in the agreement);
|
§
|
A quarterly unused commitment fee, based on our ratio of funded debt to EBITDA;
|
§
|
No pre-payment penalty.
|
§
|
Maintain a tangible net worth of at least $108.0 million;
|
§
|
Limit capital expenditures to no more than $15.0 million during any fiscal year; and
|
§
|
Maintain a ratio of funded debt to EBITDA not exceeding 2.0:1.0.
|
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Net income
|
$ | 5,057 | $ | 3,240 | $ | 3,008 | ||||||
(Loss) on interest rate swaps
|
- | - | (26 | ) | ||||||||
Less amount of swaps' fair value reclassified
to interest expense
|
- | - | 118 | |||||||||
Reclassification to income of cumulative
balance related to ineffective swap
|
- | - | 76 | |||||||||
Reclassification to income of unamortized
balance of swap termination payment
|
- | - | 61 | |||||||||
Unrealized gain on interest rate swaps
|
- | - | 229 | |||||||||
Unrealized accumulated actuarial (loss) gain on Supplemental
Retirement Income Plan (deferred compensation)
|
(803 | ) | 266 | 58 | ||||||||
Other comprehensive income before tax
|
(803 | ) | 266 | 287 | ||||||||
Income tax
|
(303 | ) | 100 | 109 | ||||||||
Other comprehensive income, net of tax
|
(500 | ) | 166 | 178 | ||||||||
Comprehensive income
|
$ | 4,557 | $ | 3,406 | $ | 3,186 |
Fifty-Two Weeks Ended
|
||||||||
January 29,
|
January 30,
|
|||||||
2012
|
2011
|
|||||||
Change in benefit obligation:
|
||||||||
Beginning projected benefit obligation
|
$ | 6,537 | $ | 6,304 | ||||
Service cost
|
525 | 583 | ||||||
Interest cost
|
337 | 340 | ||||||
Benefits paid
|
(307 | ) | (187 | ) | ||||
Actuarial loss (gain)
|
477 | (503 | ) | |||||
Ending projected benefit obligation (funded status)
|
$ | 7,569 | $ | 6,537 | ||||
Accumulated benefit obligation
|
$ | 7,238 | $ | 6,312 | ||||
Amount recognized in the consolidated balance sheets:
|
||||||||
Current liabilities
|
$ | 469 | $ | 435 | ||||
Non-current liabilities
|
7,100 | 6,102 | ||||||
Total
|
$ | 7,569 | $ | 6,537 | ||||
Other changes recognized in accumulated other comprehensive income
|
||||||||
Net gain arising during period
|
(326 | ) | (237 | ) | ||||
Net periodic benefit cost
|
862 | 923 | ||||||
Total recognized in net periodic benefit cost and
accumulated other comprehensive income
|
$ | 536 | $ | 686 |
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Net periodic benefit cost
|
||||||||||||
Service cost
|
$ | 525 | $ | 583 | $ | 632 | ||||||
Interest cost
|
337 | 340 | 355 | |||||||||
Net periodic benefit cost
|
$ | 862 | $ | 923 | $ | 987 | ||||||
Assumptions used to determine net periodic benefit cost:
|
||||||||||||
Discount rate (Moody's Composite Bond Rate)
|
5.25 | % | 5.5 | % | 5.5 | % | ||||||
Increase in future compensation levels
|
4.0 | % | 4.0 | % | 4.0 | % | ||||||
Estimated Future Benefit Payments:
|
||||||||||||
Fiscal 2013
|
$ | 469 | ||||||||||
Fiscal 2014
|
592 | |||||||||||
Fiscal 2015
|
713 | |||||||||||
Fiscal 2016
|
713 | |||||||||||
Fiscal 2017
|
713 | |||||||||||
Fiscal 2018 through Fiscal 2022
|
3,417 |
Whole
|
Grant-Date
|
Aggregate
|
Compensation
|
Grant-Date Fair Value
|
||||||||||||||||
Number of
|
Fair Value
|
Grant-Date
|
Expense
|
Unrecognized At
|
||||||||||||||||
Shares
|
Per Share
|
Fair Value
|
Recognized
|
January 29, 2012
|
||||||||||||||||
Awards outstanding balance at February 1, 2009
|
368 | |||||||||||||||||||
Shares Issued on January 15, 2010
|
2,831 | $ | 12.51 | 35 | 25 | 10 | ||||||||||||||
Shares Issued on June 11, 2010
|
7,325 | $ | 11.60 | 85 | 47 | 38 | ||||||||||||||
Shares Issued on June 10, 2011
|
11,165 | $ | 9.83 | 110 | 24 | 85 | ||||||||||||||
Awards outstanding at January 29, 2012:
|
21,321 | 230 | 96 | 133 |
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Net income
|
$ | 5,057 | $ | 3,240 | $ | 3,008 | ||||||
Less: Dividends on unvested restricted shares
|
- | - | - | |||||||||
Net earnings allocated to unvested restricted stock
|
11 | 9 | 6 | |||||||||
Earnings available for common shareholders
|
$ | 5,046 | $ | 3,231 | $ | 3,002 | ||||||
Weighted average shares outstanding for basic
earnings per share
|
10,762 | 10,757 | 10,753 | |||||||||
Dilutive effect of unvested restricted stock awards
|
28 | 13 | 7 | |||||||||
Weighted average shares outstanding for diluted earnings per share
|
10,790 | 10,770 | 10,760 | |||||||||
Basic earnings per share
|
$ | 0.47 | $ | 0.30 | $ | 0.28 | ||||||
Diluted earnings per share
|
$ | 0.47 | $ | 0.30 | $ | 0.28 |
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Current expense
|
||||||||||||
Federal
|
$ | 1,687 | $ | 2,450 | $ | 1,712 | ||||||
Foreign
|
54 | 50 | 34 | |||||||||
State
|
182 | 301 | 224 | |||||||||
Total current expense
|
1,923 | 2,801 | 1,970 | |||||||||
Deferred taxes
|
||||||||||||
Federal
|
(87 | ) | (1,735 | ) | (110 | ) | ||||||
State
|
52 | (137 | ) | 219 | ||||||||
Total deferred taxes
|
(35 | ) | (1,872 | ) | 109 | |||||||
Income tax expense
|
$ | 1,888 | $ | 929 | $ | 2,079 |
Fifty-Two Weeks Ended
|
||||||||||||
January 29,
|
January 30,
|
January 31,
|
||||||||||
2012
|
2011
|
2010
|
||||||||||
Income taxes at statutory rate
|
34.0 | % | 35.0 | % | 35.0 | % | ||||||
Increase (decrease) in tax rate resulting from:
|
||||||||||||
State taxes, net of federal benefit
|
2.3 | 2.2 | 2.5 | |||||||||
Non-cash charitable contribution of appreciated inventory
|
(0.9 | ) | (3.2 | ) | (2.2 | ) | ||||||
Officer's life insurance
|
(5.9 | ) | (6.8 | ) | (3.8 | ) | ||||||
Captive insurance disbursement
|
(1.9 | ) | (2.4 | ) | - | |||||||
Subpart F Income
|
0.2 | 2.2 | 3.1 | |||||||||
Valuation allowance against state income tax NOL's
|
- | - | 2.7 | |||||||||
Penalty
|
- | (4.2 | ) | 2.0 | ||||||||
Other
|
(0.6 | ) | (0.5 | ) | 1.6 | |||||||
Effective income tax rate
|
27.2 | % | 22.3 | % | 40.9 | % |
January 29,
|
January 30,
|
|||||||
2012
|
2011
|
|||||||
Assets
|
||||||||
Deferred compensation
|
$ | 3,080 | $ | 2,519 | ||||
Allowance for bad debts
|
729 | 785 | ||||||
State income taxes
|
173 | 233 | ||||||
Restructuring
|
6 | 27 | ||||||
Property, plant and equipment
|
404 | 722 | ||||||
Intangible assets
|
1,270 | 831 | ||||||
Charitable contribution carryforward
|
954 | 772 | ||||||
Inventories
|
- | 129 | ||||||
Other
|
191 | 191 | ||||||
Total deferred tax assets | 6,807 | 6,209 | ||||||
Valuation allowance | (139 | ) | (139 | ) | ||||
6,668 | 6,070 | |||||||
Liabilities
|
||||||||
Inventories
|
263 | - | ||||||
Employee benefits
|
343 | 346 | ||||||
Other
|
- | - | ||||||
Total deferred tax liabilities | 606 | 346 | ||||||
Net deferred tax asset | $ | 6,062 | $ | 5,724 |
January 29,
|
January 30,
|
|||||||
2012
|
2011
|
|||||||
Prepaid expenses and other current assets (current portion)
|
$ | 1,012 | $ | 1,869 | ||||
Other assets (long-term portion)
|
5,050 | 3,855 | ||||||
Total asset
|
$ | 6,062 | $ | 5,724 |
§
|
the consolidation of Bradington-Young’s Cherryville, NC manufacturing facility to Hickory, NC ($1.4 million pretax, $874,000 after tax or $0.08 per share); and
|
§
|
the write-down of our Opus Designs by Hooker trade name ($396,000 pretax, and $247,000 after tax or $0.02 per share).
|
Severance and
|
Asset
|
Pretax
|
After-tax
|
|||||||||||||||||
Related Benefits
|
Impairment
|
Other
|
Amount
|
Amount
|
||||||||||||||||
Accrued balance at February 1, 2009
|
- | - | 45 | 45 | ||||||||||||||||
Restructuring charges accrued during fiscal 2010
|
||||||||||||||||||||
Non-cash charges
|
- | - | - | - | ||||||||||||||||
Cash payments
|
- | - | (7 | ) | (7 | ) | ||||||||||||||
Accrued balance at January 31, 2010
|
- | - | 38 | 38 | ||||||||||||||||
Restructuring charges accrued during fiscal 2011
|
275 | 1,128 | 1,403 | (874 | ) | |||||||||||||||
Non-cash charges
|
(1,128 | ) | (1,128 | ) | ||||||||||||||||
Cash payments
|
(112 | ) | (7 | ) | (119 | ) | ||||||||||||||
Accrued balance at January 30, 2011
|
$ | 163 | $ | - | $ | 31 | $ | 194 | ||||||||||||
Restructuring charges accrued during fiscal 2012
|
||||||||||||||||||||
Non-cash charges
|
||||||||||||||||||||
Cash payments
|
(141 | ) | (16 | ) | (157 | ) | ||||||||||||||
Accrued balance at January 29, 2012
|
$ | 22 | $ | - | $ | 15 | $ | 37 |
§
|
Better understand our performance,
|
§
|
Better assess our prospects for future net cash flows, and
|
§
|
Make more informed judgments about us as a whole.
|
§
|
Net sales volume,
|
§
|
Gross profit and gross profit margin as a percentage of net sales,
|
§
|
Operating income and operating income margin as a percentage of net sales, and
|
§
|
Incoming order rates.
|
Fifty-Two Weeks Ended
|
||||||||||||
January 29, 2012
|
January 30, 2011
|
January 31, 2010
|
||||||||||
Net Sales
|
||||||||||||
Casegoods
|
$ | 147,927 | $ | 143,157 | $ | 140,365 | ||||||
Upholstery
|
74,578 | 72,272 | 62,982 | |||||||||
Consolidated
|
$ | 222,505 | $ | 215,429 | $ | 203,347 | ||||||
Operating Income
|
||||||||||||
Casegoods
|
$ | 10,644 | $ | 9,348 | $ | 11,048 | ||||||
Upholstery
|
(3,971 | ) | (5,287 | ) | (5,862 | ) | ||||||
Consolidated
|
$ | 6,673 | $ | 4,061 | $ | 5,186 | ||||||
Total Assets
|
||||||||||||
Casegoods
|
$ | 119,645 | $ | 118,448 | $ | 117,892 | ||||||
Upholstery
|
29,526 | 31,963 | 31,207 | |||||||||
Consolidated
|
$ | 149,171 | $ | 150,411 | $ | 149,099 | ||||||
Capital Expenditures
|
||||||||||||
Casegoods
|
$ | 2,979 | $ | 1,185 | $ | 622 | ||||||
Upholstery
|
826 | 825 | 1,056 | |||||||||
Consolidated
|
$ | 3,805 | $ | 2,010 | $ | 1,678 | ||||||
Depreciation & Amortization
|
||||||||||||
Casegoods
|
$ | (1,717 | ) | $ | (1,918 | ) | $ | (2,158 | ) | |||
Upholstery
|
(849 | ) | (930 | ) | (967 | ) | ||||||
Consolidated
|
$ | (2,566 | ) | $ | (2,848 | ) | $ | (3,125 | ) |
Fiscal Quarter
|
||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
2012
|
||||||||||||||||
Net sales
|
$ | 58,393 | $ | 55,574 | $ | 54,180 | $ | 54,358 | ||||||||
Cost of sales
|
47,360 | 43,411 | 41,443 | 41,428 | ||||||||||||
Gross profit
|
11,033 | 12,163 | 12,737 | 12,930 | ||||||||||||
Selling and administrative expenses
|
10,286 | 9,669 | 10,031 | 10,389 | ||||||||||||
Restructuring charges
|
- | - | - | - | ||||||||||||
Intangible asset impairment charges
|
- | - | - | 1,815 | (a) | |||||||||||
Net income
|
523 | 1,646 | 2,260 | 628 | ||||||||||||
Basic and diluted earnings per share
|
$ | 0.05 | $ | 0.15 | $ | 0.21 | $ | 0.06 |
Fiscal Quarter
|
||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
2011
|
||||||||||||||||
Net sales
|
$ | 51,353 | $ | 53,377 | $ | 55,735 | $ | 54,964 | ||||||||
Cost of sales
|
39,584 | 41,421 | 43,460 | 44,082 | ||||||||||||
Gross profit
|
11,769 | 11,956 | 12,275 | 10,882 | ||||||||||||
Selling and administrative expenses
|
10,063 | 10,387 | 10,610 | 9,962 | ||||||||||||
Restructuring charges
|
- | - | - | 1,403 | (b) | |||||||||||
Intangible asset impairment charges
|
- | - | - | 396 | (b) | |||||||||||
Net income (loss)
|
1,074 | 1,178 | 1,170 | (182 | ) | |||||||||||
Basic and diluted earnings (loss) per share
|
$ | 0.10 | $ | 0.11 | $ | 0.11 | $ | (0.02 | ) |
Grantee
|
Michael W. Delgatti, Jr.
|
Grant Date
|
September 7, 2011
|
Aggregate Number of RSUs
Granted
|
10,684
|
|
Date: April 12, 2012
|
/s/Paul B. Toms, Jr.
|
|
Date: April 12, 2012
|
/s/Paul A. Huckfeldt
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|