Hooker Furniture Corporation (NASDAQ-GS: HOFT) today reported its
preliminary financial results for its fiscal 2021 first quarter.
“COVID-19 had a material impact on our financial
performance in the fiscal 2021 first quarter and on the market
valuations, discount rates and other inputs used in our intangibles
valuation analysis,” said Paul B. Toms, Jr. Chairman and CEO.
“Consequently and despite having completed a similar intangible
asset valuation during our fiscal 2020 fourth quarter, we
determined that another intangible asset valuation was appropriate
given our performance and changing market dynamics. Given the
effort and complexity involved in this project, we need additional
time to complete this analysis,” he concluded.
The Company’s preliminary unaudited financial
results do not include any impairment charges on its intangibles
assets as of the end of its fiscal 2021 first quarter. Due to the
complexity of the impairment analysis resulting from economic
uncertainty of COVID-19, the Company is still in the process of
finalizing its impairment assessment, including the design and
operation of internal controls, so actual results may differ
materially from the preliminary unaudited results provided herein.
The Company expects to complete the impairment analysis and
finalize the amount of the impairment charges, if any, in
connection with the filing of the Company’s Form 10-Q for the
fiscal quarter ended May 3, 2020, which is currently expected to be
filed on or before the extended due date of July 27, 2020. The
Company is relying on Release No. 34-88465 (the “Order”) issued by
the Securities and Exchange Commission (the “SEC”) on March 25,
2020, pursuant to Section 36 of the Securities Exchange Act of
1934, as amended (the “Exchange Act), which provides conditional
relief to public companies unable to timely comply with their
filing obligations as a result of the COVID-19 pandemic.
Impairment charges, if any, will not affect the
Company’s cash position, but would adversely impact operating loss,
net loss, loss per share on the Company’s condensed consolidated
statement of operations, total comprehensive loss on the statement
of comprehensive loss, and deferred income taxes, intangible assets
and retained earnings on the condensed consolidated statement of
financial position. The Company does not plan to update this press
release when its impairment analysis is completed, but instead
intends to reflect final results in its quarterly report on Form
10-Q expected to be filed with the SEC on or before the extended
due date of July 27, 2020.
Preliminary Results
The unaudited preliminary financial results for
the fiscal 2021 first quarter represent the most current
information available to the Company and are based on calculations
or figures prepared internally and they have not been reviewed or
audited by the Company's independent registered public accounting
firm. The Company’s actual results may differ materially from these
preliminary financial results due to the completion of its
financial closing procedures, including its intangible asset
valuation, final adjustments, and other developments that may arise
between the date of this announcement and when results for the
fiscal 2021 first quarter are finalized and reported in its Form
10-Q.
The Company reported consolidated net sales of
$104.6 million and a preliminary net loss of $1.1 million, or $0.09
per share, for its fiscal 2021 first quarter that began February 3
and ended May 3, 2020.
Net sales decreased 22.8%, or $30.9 million,
compared to $135.5 million in last year’s first quarter.
Preliminary net earnings decreased $3.1 million, compared to net
income of $2.0 million, or $0.17 per share a year ago.
Gross profit decreased $6.9 million from $25.5
million, or 18.8% of net sales in the prior year first quarter to
$18.7 million, or 17.8% of net sales in the most recent first
quarter.
The double-digit sales decline and the Company’s
first quarterly operating and net income losses in over a decade
were driven by the COVID-19 pandemic, economic shutdown and
stay-at-home orders throughout the U.S. from mid-March to early
May. Also contributing to the quarterly loss and operating margin
reduction was the temporary shutdown of production at five of
Hooker’s six domestic upholstery plants in Virginia and North
Carolina, which resulted in unabsorbed fixed costs and operating
inefficiencies.
For the quarter, preliminary operating margins
decreased to a loss of $1.1 million or -1.1% of net sales, compared
to an operating income of $2.9 million or 2.1% of net sales in the
prior year first quarter, due to lower net sales, and unabsorbed
costs and operating expenses in the Home Meridian segment and
Domestic Upholstery segment.
“The COVID-19 crisis drove the most significant
downturn in our business in over 50 years,” said Paul B. Toms Jr.,
chairman and chief executive officer. “However, the disruption has
not been as severe as we initially projected. We are proud of how
our team responded and weathered the storm during this unparalleled
time of challenge. Based on the uptick in orders and retail sales
we’ve seen in recent weeks as stores and the economy reopen, we are
cautiously optimistic that the worst is behind us and that business
will steadily improve through the summer and fall.”
After beginning the current fiscal year on an
upturn with a 8.3% year-over-year increase in consolidated incoming
orders in February, orders plummeted over 70% year-over-year in
March and approximately 65% in April, Toms said. He added that
cancellations of stock orders by large customers and deferred
orders from retailers who closed their stores during the shutdown
partially drove the steep declines. Orders declined significantly
during the first few weeks of May but then recovered resulting in
about a 7% overall reduction for the full month compared to the
prior year. June orders have continued this positive
trend. “What we’ve seen recently is that orders are actually
at a higher rate than a year ago,” Toms said. “Retailers in some
regions of the country have positive reports about their business
the last few weeks, including strong Memorial Day holiday weekend
sales. We believe there are several positive factors in play such
as pent-up demand, more focus on home environments and less
competition for discretionary consumer spending from travel, eating
out and other activities.”
In addition, Hooker’s domestic upholstery
manufacturing facilities for Bradington-Young, Sam Moore and
Shenandoah began ramping up production in early May and “are
currently operating at approximately three-fourths capacity on a
consolidated basis, which is a significant increase over the fiscal
2021 first quarter, which will improve efficiencies and cost
absorption,” Toms said.
Reflecting on the Company’s response to the
international health and economic crisis, Toms believes that “The
Company performed extremely well in a very difficult environment.
First and foremost, we are grateful that none of our 1,000
employees, at any location, have tested positive for the virus to
date. That’s quite an accomplishment, and a testament to the
diligence with which Human Resources implemented best-practice
safety protocols at all locations. Our employees also followed best
practices at home and work, and adapted to working remotely while
staying productive, positive and engaged. We believe we responded
with appropriate mitigation measures to reduce operating expenses
and preserve cash with difficult but necessary decisions such as
furloughing approximately 600 manufacturing, warehouse and
administrative employees; closing five of six upholstery
manufacturing facilities for the month of April, temporarily
reducing officer and manager salaries and Board of Directors’ fees
and delaying all non-critical capital spending. Unfortunately, we
had to reduce our workforce by 35 employees but were able to keep
97% of our U.S. employees on board.”
The Company’s ongoing strategy to sell through
multiple distribution channels “proved itself during the crisis,”
Toms said. While most traditional furniture retailers were closed
for two months, “Other channels such as e-commerce, hospitality and
clubs flourished and provided a source of revenues.”
Segment Reporting: Hooker
Branded
Net sales for the Hooker Branded segment
decreased $12.4 million, or 31.4% in the fiscal 2021 first quarter,
driven by COVID-19 related reduced demand. Because the majority of
traditional furniture stores and small or regional chains closed
during the economic shutdown and comprise the most significant
share of the segment’s distribution base, incoming order rates
dropped dramatically during the quarter. Despite the sales decline,
the segment’s low-fixed-cost and high-variable-cost model enabled
it to maintain a 29.5% gross margin and a 4.9% operating income
margin during the quarter.
During the quarter, the Spring High Point
Furniture Market originally scheduled for late April was cancelled,
and High Point showrooms were closed. Despite that, Hooker
Casegoods has been able to sell new collections, originally set for
spring introductions, through a “virtual showroom” presentation on
a password-protected area of the Company’s website. “Before the
showroom closed, we prioritized upscale, environmental and detailed
photography of four new collections that are already in
production,” said Jeremy Hoff, president of Hooker Legacy Brands.
“We have done very well selling through the first cuttings via this
online presentation to our retail customers, which is very
encouraging. Our next step is to produce a 360-degree-style video
tour of the collections in our showroom this month.”
Segment Reporting: Home
Meridian
Net sales of $57.7 million in the Home Meridian
(HMI) segment decreased $10.0 million, or 14.7% in the fiscal 2021
first quarter versus the prior year quarter. Despite a sales
decline, HMI’s gross profit improved in absolute terms and as a
percentage of net sales, as the issues negatively impacting the
segment in the prior year, including excess tariff and
quality-related chargebacks, are mostly resolved. Although Home
Meridian reported a preliminary operating loss of $2.4 million, it
improved from a $5.0 million operating loss from prior year first
quarter.
“While the global economic slowdown from
COVID-19 significantly reduced Q1 orders, sales and profits, the
HMI bottom-line improvement over prior-year results is attributable
to the segment’s fundamental turnaround strategy,” said Doug
Townsend, co-president of HMI. “Some of the indicators of
improvement include: First quarter product and quality allowances
were 21% below the prior year; contribution margin, as a percent of
net sales, improved 350 basis points over last year, and fixed
expenses were $1.5 million below last year. These are all areas of
concentrated management focus, among many others,” Townsend
said.
“While the economic impact of the coronavirus will continue to
impact us in the next quarter and likely the balance of the year,
we are encouraged that April and May results were much better than
we forecasted at the beginning of the crisis. Specifically, our
e-commerce business has significantly outperformed all
expectations, and accounted for 35% of our total sales in the
quarter. Additionally, business with several of our Mega and Mass
accounts has held up much better than originally projected. We’re
cautiously optimistic that the worst of the retail slowdown is
behind us, and we’re starting to see stronger demand for shipments
as we move into the summer.”
Segment Reporting: Domestic
Upholstery
Net sales decreased $8.5 million or 33.7% in the
fiscal first quarter in the Domestic Upholstery Segment as incoming
orders fell 40%. During the month of April, manufacturing plants at
Bradington-Young and Shenandoah, were temporarily closed for most
of April, while Sam Moore operated at about 50% capacity. Employees
returned to the factories and production re-started the week of May
4, and currently the segment is operating at approximately
three-fourths capacity. Sales declines and operating inefficiencies
from the temporary shutdown resulted in significantly decreased
gross margins and an operating loss and we expect some negative
impacts to gross margins and operating income as we ramp production
up to meet increasing demand during the fiscal 2021 second
quarter.
Segment Reporting: All
Other
All Other net sales stayed essentially flat and
reported an operating income of $386,000 due to continued solid
performance at H Contract, which achieved a 16% increase in
incoming orders and 68% higher backlog compared to the prior year
first quarter.
Cash, Debt and Inventory
Despite disappointing operating results, the
Company generated $18.9 million in cash from operations, received
$673,000 life insurance proceeds, and finished the quarter with
$51.2 million in cash and cash equivalents, an increase of $15.2
million compared to the balance at fiscal 2020 year-end. The
Company also paid $2.2 million in principal and interest on its
term loans and $1.9 million in cash dividends to the shareholders.
To address the financial impact of the COVID-19 pandemic, the
Company implemented measures to reduce operating expenses and
preserve cash. Additionally, the Company had access to $25.6
million in cash surrender value of Company-owned life insurance
policies. “Along with an aggregate $25.7 million available under
our existing revolver to fund working capital, we are confident in
our financial condition, and believe we have financial resources to
weather the continued expected short-to-mid-term impacts of
COVID-19,” said Paul Huckfeldt, CFO. The Company has $28.2 million
in acquisition-related debt. Consolidated inventories stood at
$82.1 million, compared to $92.8 million at the end of last year’s
fourth quarter on February 2, 2020.
Outlook
“While we have limited visibility of how the
economic and health crisis may fluctuate in the coming months, and
still face headwinds of significant levels of unemployment, our
business is improving, and we are in a better position than we
expected just two months ago to be at this time,” said Toms. “We
believe the Company remains in exceptional financial condition with
a strong balance sheet. We are grateful for the adaptability
and resilience of our employees, and look forward to bringing our
administrative and management team members back into the offices
when the states say we can, and when we feel it is safe based on
the status of COVID-19 in the communities around our
corporate locations. We expect the second quarter to be
significantly better than the first. Barring a second wave of
infections, we expect business each quarter to improve as we go
through the year. We’re confident we will emerge from this crisis a
stronger company.”
Dividends
On June 2, 2020, the Company’s board of
directors declared a quarterly cash dividend of $0.16 per share,
payable on June 30, 2020, to shareholders of record at June 16,
2020.
Conference Call Details
Hooker Furniture will present its fiscal 2021
first quarter financial results via teleconference and live
internet web cast on Friday morning, June 12, 2020 at 9:00 AM
Eastern Time. Due to increased conference call volume noted by
service providers, the Company encourages call participants to dial
in at least fifteen minutes prior to the start of the call. The
dial-in number for domestic callers is 877.665.2466 and the number
for international callers is 678.894.3031. The conference ID number
is 1548679. The call will be simultaneously web cast and archived
for replay on the Company's web site at www.hookerfurniture.com in
the Investor Relations section.
Hooker Furniture Corporation, in its 97th year
of business, 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. The Company also domestically manufactures
premium residential custom leather and custom fabric-upholstered
furniture. It is ranked among the nation’s largest publicly traded
furniture sources, based on 2019 shipments to U.S. retailers,
according to a 2020 survey by a leading trade publication. Major
casegoods product categories include home entertainment, home
office, accent, dining, and bedroom furniture in the upper-medium
price points sold under the Hooker Furniture brand. Hooker’s
residential upholstered seating product lines include
Bradington-Young, a specialist in upscale motion and stationary
leather furniture, Sam Moore Furniture, a specialist in upscale
occasional chairs, settees, sofas and sectional seating with an
emphasis on cover-to-frame customization, Hooker Upholstery,
imported upholstered furniture targeted at the upper-medium
price-range and Shenandoah Furniture, an upscale upholstered
furniture company specializing in private label sectionals,
modulars, sofas, chairs, ottomans, benches, beds and dining chairs
in the upper-medium price points for lifestyle specialty retailers.
The H Contract product line supplies upholstered seating and
casegoods to upscale senior living facilities. The Home Meridian
division addresses more moderate price points and channels of
distribution not currently served by other Hooker Furniture
divisions or brands. Home Meridian’s brands include Accentrics
Home, home furnishings centered around an eclectic mix of unique
pieces and materials that offer a fresh take on home fashion,
Pulaski Furniture, casegoods covering the complete design spectrum
in a wide range of bedroom, dining room, accent and display
cabinets at medium price points, Samuel Lawrence Furniture,
value-conscious offerings in bedroom, dining room, home office and
youth furnishings, Prime Resources, value-conscious imported
leather upholstered furniture, Samuel Lawrence Hospitality, a
designer and supplier of hotel furnishings and HMidea, a 2019
start-up that provides better-quality, ready-to-assemble furniture
to mass marketers and e-commerce customers. Hooker Furniture
Corporation’s corporate offices and upholstery manufacturing
facilities are located in Virginia and North Carolina, with
showrooms in High Point, N.C. and Ho Chi Minh City, Vietnam. The
company operates eight distribution centers in North Carolina,
Virginia, California and Vietnam. Please visit our websites
hookerfurniture.com, bradington-young.com, sammoore.com,
hcontractfurniture.com, homemeridian.com, pulaskifurniture.com,
accentricshome.com and slh-co.com.
Certain statements made in this release, other
than those based on historical facts, may be forward-looking
statements. Forward-looking 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 thereof, or other variations thereon, 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: (1) The effect and consequences of the
coronavirus (COVID-19) pandemic or future pandemics on a wide range
of matters including U.S. and local economies; our business
operations and continuity; the health and productivity of our
employees; the impact on our supply chain, the retail environment
and our customer base; the possible impairment of our intangible
assets as a result of adverse economic or other market conditions;
(2) 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; (3) 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 current U.S. administration imposing a 25%
tariff on certain goods imported into the United States from China,
including almost all furniture and furniture components
manufactured in China, with the potential for additional or
increased tariffs in the future; (4) sourcing transitions away from
China, including the lack of adequate manufacturing capacity and
skilled labor and longer lead times, due to competition and
increased demand for resources in those countries; (5) 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 timely fill customer orders; (6) changes in
U.S. and foreign government regulations and in the political,
social and economic climates of the countries from which we source
our products; (7) 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; (8)
difficulties in forecasting demand for our imported products; (9)
risks associated with product defects, including higher than
expected costs associated with product quality and safety, and
regulatory compliance costs related to the sale of consumer
products and costs related to defective or non-compliant products,
including product liability claims and costs to recall defective
products; (10) disruptions and damage (including due to weather)
affecting our Virginia, North Carolina or California warehouses,
our Virginia or North Carolina administrative facilities or our
representative offices or warehouses in Vietnam and China; (11)
risks associated with domestic manufacturing operations, including
fluctuations in capacity utilization and the 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; (12) the risks specifically related to the concentrations of
a material part of our sales and accounts receivable in only a few
customers; (13) our inability to collect amounts owed to us or
significant delays in collecting such amounts; (14) the
interruption, inadequacy, security breaches or integration failure
of our information systems or information technology
infrastructure, related service providers or the internet or other
related issues including unauthorized disclosures of confidential
information or inadequate levels of cyber-insurance or risks not
covered by cyber insurance; (15) achieving and managing growth and
change, and the risks associated with new business lines,
acquisitions, restructurings, strategic alliances and international
operations; (16) higher than expected employee medical and workers’
compensation costs that may increase the cost of our
high-deductible healthcare and workers compensation plans; (17)
product liability claims; (18) risks related to our other defined
benefit plans; (19) the possible impairment of our long-lived
assets, which can result in reduced earnings and net worth; (20)
capital requirements and costs, including the servicing of our
floating-rate term loans; (21) risks associated with distribution
through third-party retailers, such as non-binding dealership
arrangements; (22) the cost and difficulty of marketing and selling
our products in foreign markets; (23) changes in domestic and
international monetary policies and fluctuations in foreign
currency exchange rates affecting the price of our imported
products and raw materials; (24) 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; (25) price competition in the furniture industry; (26)
competition from non-traditional outlets, such as internet and
catalog retailers; (27) changes in consumer preferences, including
increased demand for lower-quality, lower-priced furniture due to,
among other things, fluctuating consumer confidence, amounts of
discretionary income available for furniture purchases and the
availability of consumer credit; and (28) other risks and
uncertainties described under Part I, Item 1A. "Risk Factors" in
the Company’s Annual Report on Form 10-K for the fiscal year ended
February 2, 2020. Any forward-looking statement that 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.
Table
I |
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands,
except per share data) |
|
(Unaudited) |
|
|
|
|
|
|
Thirteen
Weeks Ended |
|
|
|
|
|
|
May
3, |
|
May 5, |
|
|
|
|
|
|
2020 * |
|
2019 |
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
$ |
104,597 |
|
|
$ |
135,518 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
85,944 |
|
|
|
110,001 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
|
18,653 |
|
|
|
25,517 |
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses |
|
|
|
|
|
19,177 |
|
|
|
22,016 |
|
Intangible asset amortization |
|
|
|
|
|
596 |
|
|
|
596 |
|
|
|
|
|
|
|
|
|
|
Operating (loss)/income |
|
|
|
|
|
(1,120 |
) |
|
|
2,905 |
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
|
|
|
|
(42 |
) |
|
|
(62 |
) |
Interest expense, net |
|
|
|
|
|
197 |
|
|
|
341 |
|
|
|
|
|
|
|
|
|
|
(Loss)/income before income taxes |
|
|
|
|
(1,359 |
) |
|
|
2,502 |
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)/expense |
|
|
|
|
|
(282 |
) |
|
|
515 |
|
|
|
|
|
|
|
|
|
|
Net (loss)/income |
|
|
|
|
$ |
(1,077 |
) |
|
$ |
1,987 |
|
|
|
|
|
|
|
|
|
|
(Loss)/earnings per share: |
|
|
|
|
|
|
|
Basic |
|
|
|
|
$ |
(0.09 |
) |
|
$ |
0.17 |
|
Diluted |
|
|
|
|
$ |
(0.09 |
) |
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
|
|
|
11,798 |
|
|
|
11,769 |
|
Diluted |
|
|
|
|
|
11,798 |
|
|
|
11,805 |
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share |
|
|
|
|
$ |
0.16 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*PRELIMINARY;
SUBJECT TO SUBSTANTIAL REVISION BASED ON IMPAIRMENT
TESTING |
|
AND FINAL CLOSING PROCEDURES |
|
|
|
|
|
|
Table
II |
|
|
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME |
|
|
(In thousands) |
|
|
(Unaudited) |
|
|
|
Thirteen
Weeks Ended |
|
|
May
3, |
|
May 5, |
|
|
2020 * |
|
2019 |
|
|
|
|
|
|
Net
(Loss)/Income |
$ |
(1,077 |
) |
|
$ |
1,987 |
|
|
Other comprehensive income (loss): |
|
|
|
|
Amortization of actuarial (loss) gain |
|
84 |
|
|
|
37 |
|
|
Income tax effect on amortization |
|
(20 |
) |
|
|
(9 |
) |
|
Adjustments to net periodic benefit cost |
|
64 |
|
|
|
28 |
|
|
|
|
|
|
|
Total
Comprehensive (Loss)/ Income |
$ |
(1,013 |
) |
|
$ |
2,015 |
|
|
|
|
|
|
|
|
|
|
|
|
*PRELIMINARY; SUBJECT TO SUBSTANTIAL REVISION BASED ON
IMPAIRMENT TESTING |
|
AND FINAL CLOSING PROCEDURES |
|
|
|
|
Table
III |
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In thousands) |
|
|
|
|
|
As
of |
|
May 3, |
|
February 2, |
|
|
2020
* |
|
2020 |
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
51,240 |
|
|
$ |
36,031 |
|
Trade accounts receivable, net |
|
|
63,852 |
|
|
|
87,653 |
|
Inventories |
|
|
82,050 |
|
|
|
92,813 |
|
Income tax recoverable |
|
|
1,615 |
|
|
|
751 |
|
Prepaid expenses and other current assets |
|
|
5,545 |
|
|
|
4,719 |
|
Total current assets |
|
|
204,302 |
|
|
|
221,967 |
|
Property,
plant and equipment, net |
|
|
29,256 |
|
|
|
29,907 |
|
Cash
surrender value of life insurance policies |
|
|
25,603 |
|
|
|
24,888 |
|
Deferred
taxes |
|
|
2,320 |
|
|
|
2,880 |
|
Operating
leases right-of-use assets |
|
|
37,786 |
|
|
|
39,512 |
|
Intangible
assets, net |
|
|
32,775 |
|
|
|
33,371 |
|
Goodwill |
|
|
40,058 |
|
|
|
40,058 |
|
Other
assets |
|
|
1,113 |
|
|
|
1,125 |
|
Total non-current assets |
|
|
168,911 |
|
|
|
171,741 |
|
Total assets |
|
$ |
373,213 |
|
|
$ |
393,708 |
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Current portion of term loans |
|
$ |
28,170 |
|
|
$ |
5,834 |
|
Trade accounts payable |
|
|
13,396 |
|
|
|
25,493 |
|
Accrued salaries, wages and benefits |
|
|
3,271 |
|
|
|
4,933 |
|
Customer deposits |
|
|
4,024 |
|
|
|
3,351 |
|
Current portion of lease liabilities |
|
|
6,162 |
|
|
|
6,307 |
|
Other accrued expenses |
|
|
2,480 |
|
|
|
4,211 |
|
Total current liabilities |
|
|
57,503 |
|
|
|
50,129 |
|
Long term
debt |
|
|
- |
|
|
|
24,282 |
|
Deferred
compensation |
|
|
11,310 |
|
|
|
11,382 |
|
Lease
liabilities |
|
|
32,581 |
|
|
|
33,794 |
|
Total
long-term liabilities |
|
|
43,891 |
|
|
|
69,458 |
|
Total liabilities |
|
|
101,394 |
|
|
|
119,587 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
Common stock, no par value, 20,000 shares
authorized, |
|
|
|
|
11,871 and 11,838 shares issued and outstanding on
each date |
|
52,187 |
|
|
|
51,582 |
|
Retained earnings |
|
|
220,281 |
|
|
|
223,252 |
|
Accumulated other comprehensive loss |
|
|
(649 |
) |
|
|
(713 |
) |
Total shareholders’ equity |
|
|
271,819 |
|
|
|
274,121 |
|
Total liabilities and shareholders’ equity |
|
$ |
373,213 |
|
|
$ |
393,708 |
|
|
|
|
|
|
|
|
|
|
|
*PRELIMINARY; SUBJECT TO SUBSTANTIAL REVISION BASED
ON |
|
|
IMPAIRMENT TESTING AND FINAL CLOSING
PROCEDURES |
|
|
|
Table
IV |
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In thousands) |
(Unaudited) |
|
Thirteen
Weeks Ended |
|
May
3, |
|
May 5, |
|
2020 * |
|
2019 |
Operating Activities: |
|
|
|
Net
(loss)/income |
$ |
(1,077 |
) |
|
$ |
1,987 |
|
Adjustments
to reconcile net income to net cash |
|
|
|
provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
1,685 |
|
|
|
1,716 |
|
Gain on disposal of assets |
|
- |
|
|
|
(274 |
) |
Deferred income tax expense |
|
540 |
|
|
|
2,344 |
|
Non-cash restricted stock and performance awards |
|
605 |
|
|
|
463 |
|
(Benefit from)/provision for doubtful accounts and sales
allowances |
|
(328 |
) |
|
|
862 |
|
Gain on life insurance policies |
|
(571 |
) |
|
|
(555 |
) |
Changes in assets and liabilities |
|
|
|
Trade accounts receivable |
|
24,129 |
|
|
|
33,451 |
|
Inventories |
|
10,763 |
|
|
|
(5,561 |
) |
Income tax recoverable |
|
(864 |
) |
|
|
- |
|
Prepaid expenses and other current assets |
|
(1,468 |
) |
|
|
(3,186 |
) |
Trade accounts payable |
|
(12,149 |
) |
|
|
(8,165 |
) |
Accrued salaries, wages and benefits |
|
(1,661 |
) |
|
|
(3,266 |
) |
Accrued income taxes |
|
- |
|
|
|
(1,867 |
) |
Customer deposits |
|
673 |
|
|
|
3,117 |
|
Operating lease liabilities |
|
367 |
|
|
|
(167 |
) |
Other accrued expenses |
|
(1,731 |
) |
|
|
(664 |
) |
Deferred compensation |
|
12 |
|
|
|
51 |
|
Net cash provided by operating activities |
|
18,925 |
|
|
|
20,286 |
|
|
|
|
|
Investing Activities: |
|
|
|
Purchases of property, plant and equipment |
|
(381 |
) |
|
|
(1,527 |
) |
Proceeds received on notes receivable |
|
- |
|
|
|
1,449 |
|
Proceeds received on life insurance policies |
|
673 |
|
|
|
- |
|
Premiums paid on life insurance policies |
|
(162 |
) |
|
|
(157 |
) |
Net cash provided by/(used in) investing activities |
|
130 |
|
|
|
(235 |
) |
|
|
|
|
Financing Activities: |
|
|
|
Payments for long-term debt |
|
(1,952 |
) |
|
|
(1,464 |
) |
Cash dividends paid |
|
(1,894 |
) |
|
|
(1,768 |
) |
Cash used in financing activities |
|
(3,846 |
) |
|
|
(3,232 |
) |
|
|
|
|
Net
increase in cash and cash equivalents |
|
15,209 |
|
|
|
16,819 |
|
Cash
and cash equivalents at the beginning of year |
|
36,031 |
|
|
|
11,435 |
|
Cash
and cash equivalents at the end of year |
$ |
51,240 |
|
|
$ |
28,254 |
|
|
|
|
|
Supplemental
schedule of cash flow information: |
|
|
|
Interest
paid, net |
$ |
240 |
|
|
$ |
329 |
|
Income taxes
paid, net |
|
43 |
|
|
|
38 |
|
|
|
|
|
Supplemental
schedule of noncash investing activities: |
|
|
|
Increase in
property and equipment through accrued purchases |
$ |
51 |
|
|
$ |
743 |
|
Decrease in
lease liabilities arising from obtaining right-of-use assets |
|
(3 |
) |
|
|
- |
|
|
|
|
|
*PRELIMINARY; SUBJECT TO SUBSTANTIAL REVISION BASED
ON |
|
|
|
IMPAIRMENT TESTING AND FINAL CLOSING
PROCEDURES |
|
|
|
Table
V |
|
|
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
|
|
NET SALES AND
OPERATING (LOSS) INCOME BY SEGMENT |
|
|
(In
thousands) |
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen
Weeks Ended |
|
|
|
|
|
|
|
|
May
3, |
|
May 5, |
|
|
|
|
|
|
|
|
|
2020 * |
|
2019 |
|
|
|
|
|
|
|
|
|
|
%
Net |
|
% Net |
|
Net
Sales |
|
|
|
|
|
|
|
Sales |
|
Sales |
|
Hooker Branded |
|
|
|
|
|
|
$ |
27,162 |
|
26.0 |
% |
$ |
39,600 |
|
29.2 |
% |
|
Home Meridian |
|
|
|
|
|
|
|
57,665 |
|
55.1 |
% |
|
67,630 |
|
49.9 |
% |
|
Domestic Upholstery |
|
|
|
|
|
|
|
16,783 |
|
16.0 |
% |
|
25,324 |
|
18.7 |
% |
|
All Other |
|
|
|
|
|
|
|
2,987 |
|
2.9 |
% |
|
2,964 |
|
2.2 |
% |
|
Consolidated |
|
|
|
|
|
|
$ |
104,597 |
|
100.0 |
% |
$ |
135,518 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)/income |
|
|
|
|
|
|
|
|
|
|
Hooker Branded |
|
|
|
|
|
|
$ |
1,333 |
|
4.9 |
% |
$ |
5,177 |
|
13.1 |
% |
|
Home Meridian |
|
|
|
|
|
|
|
(2,411 |
) |
-4.2 |
% |
|
(4,993 |
) |
-7.4 |
% |
|
Domestic Upholstery |
|
|
|
|
|
|
|
(429 |
) |
-2.6 |
% |
|
2,292 |
|
9.1 |
% |
|
All Other |
|
|
|
|
|
|
|
387 |
|
13.0 |
% |
|
429 |
|
14.5 |
% |
|
Consolidated |
|
|
|
|
|
|
$ |
(1,120 |
) |
-1.1 |
% |
$ |
2,905 |
|
2.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*PRELIMINARY; SUBJECT TO SUBSTANTIAL REVISION BASED
ON IMPAIRMENT TESTING AND FINAL CLOSING
PROCEDURES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior-Year amounts have been restated to reflect a change in the
Company’s reportable segments.
For more information, contact:Paul B.
Toms Jr.Chairman and Chief Executive
OfficerPhone: (276) 632-2133, or
Paul A. Huckfeldt, Senior Vice
President, Finance & Accounting & Chief Financial
OfficerPhone: (276) 666-3949
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