SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
----- Exchange Act of 1934
For the quarterly period ended August 31, 2001 or
---------------
Transition report pursuant to Section 13 or 15(d) of the Securities
----- Exchange Act of 1934
For the transition period from to .
---------- ----------
Commission file number 000-25349.
HOOKER FURNITURE CORPORATION
----------------------------
(Exact name of registrant as specified in its charter)
Virginia 54-0251350
------------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
440 East Commonwealth Boulevard, Martinsville, VA 24112
--------------------------------------------------------
(Address of principal executive offices, Zip Code)
(540) 632-2133
-----------------------------
(Registrant's telephone number,
including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of October 8, 2001.
Class Number
----- ------
Common Stock, no par value 7,331,347 Shares
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
HOOKER FURNITURE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, including share data)
(Unaudited)
August 31, November 30,
2001 2000
Assets
Current assets
Cash, primarily interest-bearing deposits............. $ 9,433 $ 1,243
Trade receivables, less allowances of $640 and $610... 25,213 31,019
Inventories........................................... 34,899 42,785
Income tax recoverable................................ 1,324 458
Prepaid expenses and other............................ 3,581 1,505
-------- --------
Total current assets................................ 74,450 77,010
Property, plant and equipment, net..................... 49,742 48,767
Other assets........................................... 5,067 7,754
-------- --------
$129,259 $133,531
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Trade accounts payable................................ $ 2,375 $ 5,406
Accrued salaries, wages and benefits.................. 5,081 6,470
Other accrued expenses................................ 4,009 2,884
Current maturities of long-term debt.................. 2,953 1,581
-------- --------
Total current liabilities............................ 14,418 16,341
Long-term debt......................................... 25,130 27,919
Deferred liabilities................................... 3,227 3,300
-------- --------
Total liabilities..................................... 42,775 47,560
-------- --------
Common stock held by ESOP.............................. 10,804 10,412
Stockholders' Equity
Common stock, no par value, 10,000 shares authorized,
7,492 and 7,617 shares issued and outstanding......... 2,765 2,605
Unearned ESOP shares (1,710 and 1,761 shares).......... (21,369) (22,009)
Retained earnings...................................... 95,792 94,963
Accumulated other comprehensive loss................... (1,508)
-------- --------
Total stockholders' equity............................ 75,680 75,559
-------- --------
$129,259 $133,531
======== ========
The accompanying notes are an integral part of the financial statements.
2
HOOKER FURNITURE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Three Months Nine Months
Ended August 31, Ended August 31,
2001 2000 2001 2000
Net sales.............................. $50,606 $61,538 $162,108 $184,713
Cost of sales.......................... 39,825 45,138 125,097 136,702
------- ------- -------- --------
Gross profit......................... 10,781 16,400 37,011 48,011
Selling and administrative expenses.... 9,240 10,315 28,949 29,560
Restructuring charge................... 881 881
------- ------- -------- --------
Operating income..................... 660 6,085 7,181 18,451
Other income, net...................... 330 320 965 541
Interest expense....................... 524 168 1,537 494
------- ------- -------- --------
Income before taxes.................. 466 6,237 6,609 18,498
Income taxes........................... 299 2,108 2,631 6,766
------- ------- -------- --------
Net income........................... $ 167 $ 4,129 $ 3,978 $ 11,732
======= ======= ======== ========
Earnings per share:
Basic and diluted.................... $ .03 $ .54 $ .68 $ 1.54
======= ======= ======== ========
Weighted average shares outstanding.. 5,854 7,617 5,863 7,617
======= ======= ======== ========
The accompanying notes are an integral part of the financial statements.
3
HOOKER FURNITURE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months
Ended August 31,
2001 2000
Cash flows from operating activities:
Cash received from customers.................................... $ 168,696 $ 181,893
Cash paid to suppliers and employees............................ (147,696) (167,896)
Income taxes paid, net.......................................... (3,497) (6,579)
Interest paid, net.............................................. (1,326) (494)
--------- ---------
Net cash provided by operating activities...................... 16,177 6,924
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment....................... (6,547) (9,030)
Acquisition of joint venture interest, net of cash acquired..... (801)
Sale of property................................................ 2,779
--------- ---------
Net cash absorbed by investing activities...................... (3,768) (9,831)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt.................................... 2,500 15,500
Payments on long-term debt...................................... (3,918) (10,000)
Cash dividends paid............................................. (1,708) (1,941)
Purchase and retirement of common stock......................... (1,093)
--------- ---------
Net cash provided (absorbed) by financing activities........... (4,219) 3,559
--------- ---------
Net increase in cash............................................. 8,190 652
Cash at beginning of year........................................ 1,243 157
--------- ---------
Cash at end of period............................................ $ 9,433 $ 809
========= =========
Reconciliation of net income to net cash provided
by operating activities:
Net income..................................................... $ 3,978 $ 11,732
Depreciation and amortization................................. 5,552 4,770
Non-cash ESOP cost............................................ 845
(Gain) loss on disposal of property........................... (59) 53
Changes in assets and liabilities:
Trade receivables............................................ 5,806 (3,354)
Inventories.................................................. 7,886 (6,956)
Income tax recoverable....................................... (866)
Prepaid expenses and other assets............................ (2,089) 316
Trade accounts payable....................................... (3,031) (1,719)
Other accrued expenses....................................... (1,822) 1,996
Deferred liabilities......................................... (23) 86
--------- ---------
Net cash provided by operating activities...................... $ 16,177 $ 6,924
========= =========
The accompanying notes are an integral part of the financial statements.
4
HOOKER FURNITURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in tables, in thousands unless otherwise indicated)
1. Preparation of Interim Financial Statements
The financial statements of Hooker Furniture Corporation (referred to as
"Hooker" or the "Company") have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission ("SEC"). In the opinion
of management, these statements include all adjustments necessary for a fair
presentation of the results of all interim periods reported herein. All such
adjustments are of a normal recurring nature. Certain information and footnote
disclosures prepared in accordance with generally accepted accounting principles
are condensed or omitted pursuant to SEC rules and regulations. However,
management believes that the disclosures made are adequate for a fair
presentation of results of operations and financial position. Operating results
for the interim periods reported herein may not be indicative of the results
expected for the year. These financial statements should be read in conjunction
with the financial statements and accompanying notes included in the Company's
Annual Report on Form 10K for the fiscal year ended November 30, 2000.
Certain items in the financial statements for periods prior to 2001 have been
reclassified to conform to the 2001 method of presentation.
2. Inventories
(Unaudited)
August 31, November 30,
2001 2000
Finished furniture........................ $32,728 $38,408
Furniture in process...................... 2,859 2,647
Materials and supplies.................... 11,291 12,883
------- -------
46,878 53,938
Reduction to LIFO basis................... 11,979 11,153
------- -------
$34,899 $42,785
======= =======
3. Property, Plant and Equipment
(Unaudited)
August 31, November 30,
2001 2000
Buildings................................. $ 44,002 $ 43,285
Machinery and equipment................... 49,408 46,235
Office fixtures and equipment............. 12,202 10,292
Construction in progress and other........ 3,381 2,927
-------- --------
Property, plant and equipment, at cost.. 108,993 102,739
Less accumulated depreciation............. 60,537 55,258
-------- --------
48,456 47,481
Land...................................... 1,286 1,286
-------- --------
$ 49,742 $ 48,767
======== ========
5
Notes To Consolidated Financial Statements - Continued
4. Long-Term Debt
(Unaudited)
August 31, November 30,
2001 2000
Term loan................................. $21,083 $22,500
Industrial revenue bonds due 2006......... 7,000 7,000
------- -------
28,083 29,500
Less current maturities................... 2,953 1,581
------- -------
$25,130 $27,919
======= =======
The Company expects to prepay approximately $600,000 of the industrial revenue
bonds in the fourth quarter of 2001, in connection with an examination of those
bonds by the Internal Revenue Service. During the third quarter of 2001, the
Company recorded $87,000 of additional income tax expense in connection with the
examination.
5. Assets Held For Sale
On May 31, 2001, the Company's wholly-owned subsidiary, Triwood, Inc., sold
land, and a building to a third party for $2.7 million in cash. The property had
been leased to the buyer with an option to purchase. The transaction did not
have a material impact on results of operations or financial position.
On August 1, 2001, a lease on the 189,000 square foot Company warehouse located
in Martinsville, Virginia known as the Cloverleaf warehouse expired. The
Company continues to hold Cloverleaf for sale or lease. Cloverleaf's carrying
value of $1.7 million is classified as "other assets".
6. Restructuring Charge
On August 30, 2001, the Company announced the downsizing of the workforce at its
Martinsville, Virginia plant to make it more efficient and bring it in line with
the capacity of its other plants. The downsizing involved a workforce reduction
of approximately 100 employees, or about 5% of the Company's total workforce.
In connection with the downsizing, the Company recorded a restructuring charge
of $881,000 pretax, consisting of severance and early retirement benefits for
the terminated employees. The Company paid $65,000 of the early retirement
benefits in August 2001.
The Company also recorded a $321,000 pretax expense related to the repurchase of
19,000 shares of common stock by the Company's Employee Stock Ownership Plan
("ESOP") from some of the terminated employees, as required by the terms of the
ESOP. These shares will be repurchased by the ESOP during the fourth quarter of
2001 and will be reallocated to active ESOP participants.
7. Common Stock
In June 2001, the Company's Board of Directors (the "Board") authorized the
repurchase of up to $3.0 million of the Company's common stock. Repurchases may
be made from time to time in the open market, or in privately negotiated
transactions, at prevailing market prices that the Company deems appropriate.
Through September 25, 2001, the Company had repurchased 253,000 shares at a
total cost of $2.2 million or an average of $8.52 per share.
6
Notes to Consolidated Financial Statements - Continued
At its September 2001 meeting, the Board authorized the repurchase of an
additional $2.2 million of the Company's common stock (for a total of up to $3.0
million). Based on the market value of the common stock as of September 25,
2001, the current $3.0 million authorization would allow the Company to
repurchase approximately 5.0% of the 7.4 million shares outstanding, or 7.4% of
the Company's outstanding shares excluding the 2.4 million shares held by the
ESOP.
In addition to any purchases that may be made under the stock repurchase
program, the Company also expects to repurchase 40,000 shares of common stock
during the fourth quarter of 2001, from some of the employees terminated in the
Martinsville downsizing, at a total cost of approximately $719,000 as required
by the ESOP.
8. Derivatives
The Company uses interest rate swap agreements to manage variable interest rate
exposures on its long-term debt. Consequently, the Company was required to
adopt Statement of Financial Accounting Standards Nos. 133 ("SFAS 133") and 138
("SFAS 138"), both entitled "Accounting for Derivative Instruments and Hedging
Activities" in the first quarter of 2001. SFAS 133 as amended by SFAS 138
(collectively the "Standards") requires the recognition of derivatives as either
assets or liabilities on the balance sheet and the measurement of those
instruments at fair value.
The Company's objectives for holding these derivatives are to decrease the
volatility of future cash flows associated with interest payments on its
variable rate debt. The Company's swap agreements in effect, provide a fixed
interest rate of 4.7% on its industrial revenue bonds through 2006, and 7.4% on
its term loan through 2010. The notional principal values of these agreements
are substantially equal to the outstanding long-term debt balances. Differences
between amounts paid and amounts received under the contracts are recognized in
interest expense.
The Company believes that its swap agreements are "highly effective cash flow
hedges", as defined by the Standards, in managing the volatility of future cash
flows associated with interest payments on its variable rate debt. The
"effective" portion of the derivative's gain or loss (i.e. that portion of the
derivative's gain or loss that offsets the corresponding change in the cash
flows of the hedged transaction) is initially reported as a component of
"accumulated other comprehensive income (loss)" and will be subsequently
reclassified into earnings when the hedged exposure affects earnings (i.e. when
interest expense on the debt is accrued). The "ineffective" portion of the
derivative's gain or loss is recognized in earnings immediately.
In the third quarter of 2001, the Company recognized a decrease in the aggregate
fair market value of its swap agreements, resulting from the general decline in
interest rates that occurred during the period. The decrease in the aggregate
fair market value of the agreements of $1.5 million (net of an income tax
benefit of $924,000) is reflected under the caption "accumulated other
comprehensive loss" in the balance sheet.
9. Comprehensive Income (Loss)
Three Months Nine Months
Ended August 31, Ended August 31,
2001 2000 2001 2000
Net income....................................... $ 167 $4,129 $3,978 $11,732
Other comprehensive loss:
Decrease in fair value of interest rate swap
agreements, net of tax benefit of $924....... 1,508 1,508
------- ------ ------ -------
$(1,341) $4,129 $2,470 $11,732
======= ====== ====== =======
7
HOOKER FURNITURE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net sales decreased $10.9 million, or 17.8%, to $50.6 million for the three-
month period ended August 31, 2001 from the comparable 2000 period. Unit volume
declined across all product lines. For the nine-month period of 2001, net sales
decreased $22.6 million, or 12.2%, to $162.1 million from the comparable 2000
period. Lower unit volume in domestically produced product lines was partially
offset by increased unit volume in imported furniture. Average selling prices
declined during the 2001 periods principally due to a change in the mix of
products sold. The sales declines in the 2001 periods are a reflection of the
industry wide downturn since late 2000.
Gross profit margin decreased to 21.3% in the 2001 third quarter, compared 26.7%
in the 2000 period, and decreased to 22.8% in the 2001 nine-month period,
compared to 26.0% in the 2000 period. The decreases were due principally to an
increase in overhead cost as a percentage of sales resulting from lower
production levels, partially offset by the lower delivered cost of imported
furniture. Also during the 2001 third quarter, raw material and direct labor
costs were lower as a percentage of sales than in the comparable 2000 period.
The Company's manufacturing facilities continued working a short, 35-hour weekly
production schedule during the current-year third quarter. In addition the
Company's production facilities were closed for one week in July for annually
scheduled maintenance and also for one week in August to control inventory
levels.
Selling and administrative expenses decreased $1.1 million to $9.2 million for
the three-month period of 2001 and decreased $611,000 to $28.9 million for the
nine-month period of 2001, from the comparable 2000 periods. During the 2001
periods, the Company incurred lower selling expenses related to lower sales
(principally sales commissions) and lower legal and professional costs. Legal
and professional costs were higher in the 2000 periods due to fees incurred in
connection with a tender offer by the Company's Employee Stock Ownership Plan
("ESOP") completed in September 2000. As a percentage of net sales, selling and
administrative expenses increased to 18.3% in the three-month 2001 period, from
16.8% in the comparable 2000 period, and increased to 17.9% in the nine-month
2001 period, from 16.0% in the comparable 2000 period, in each case as a result
of lower net sales in the 2001 periods.
While production costs and selling and administrative expenses decreased during
the three and nine-month periods of 2001, these reductions in cost were not
sufficient to completely offset the effect of lower volume on operating margins.
A one-time restructuring charge and a special common stock repurchase by the
ESOP also contributed to the decline in operating income for the three and nine-
month periods in 2001. These expenses were related to the previously announced
workforce reduction of about 100 Martinsville employees on August 30. The one-
time restructuring charge consisted of $881,000 pretax, in severance and early
retirement benefits paid to terminated employees. In addition, the Company
recorded a $321,000 pretax expense related to the repurchase of 19,000 shares of
common stock by the ESOP from some of the terminated employees, as required by
the terms of the ESOP. These shares will be repurchased by the ESOP during the
fourth quarter of 2001 and will be reallocated to active ESOP participants.
These combined, non-recurring charges reduced operating income by $1.2 million.
8
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Continued
Results of Operations - Continued
As a result of the above, operating income decreased to $660,000, or 1.3% of net
sales, in the three-month 2001 period, from $6.1 million, or 9.9% of net sales,
in the comparable 2000 period. Operating income for the nine-month 2001 period
decreased to $7.2 million, or 4.4% of net sales, from $18.5 million, or 10.0% of
net sales, in the comparable 2000 period.
Interest expense increased $356,000 to $524,000 during the 2001 third quarter
and $1.0 million to $1.5 million during the 2001 nine-month period from the
comparable 2000 periods. In both 2001 periods, the increase was due to interest
incurred on the September 2000 term loan entered into in connection with a
tender offer by the Company's ESOP for 1.8 million shares of Hooker Furniture
common stock.
The Company's effective tax rate approximated 64.2% in the three-month period
of 2001, compared to 33.8% in the comparable 2000 period, and approximated 39.8%
in the nine-month period of 2001, compared to 36.6% in the comparable 2000
period. The 2001 tax rates reflect an additional income tax expense of $87,000
recognized in connection with an examination by the Internal Revenue Service of
the Company's industrial revenue bond issue. This additional income tax expense
combined with lower pretax income in the 2001 third quarter resulted in an
effective tax rate for the 2001 period that was substantially higher than for
the 2000 third quarter. The Company's effective tax rates in the 2000 periods
reflect the effect of certain non-recurring tax benefits recognized in
connection with the operation of its imports furniture business through its
wholly-owned subsidiary Triwood, Inc.
Net income for the 2001-third quarter declined 96.0%, to $167,000, compared with
$4.1 million in the 2000 third quarter. Net income for the nine-month period of
2001 declined 66.1%, to $4.0 million, from $11.7 million in the year ago period.
Earnings per share decreased to $0.03 for the three-month period of 2001,
compared with $0.54 in the prior year period, and decreased to $0.68 for the
nine-month period of 2001, compared with $1.54 in the prior year period. The
restructuring charge and the common stock repurchase by the ESOP reduced
earnings per share by $0.13 in each of the three and nine-month periods of 2001.
All the Company's manufacturing employees in Virginia and North Carolina
returned to 40-hours-per-week work schedules on September 10, 2001. The
Company's production facilities were closed the first week of September to
control inventory levels. Although the Company expects to operate at full
production work schedules for the foreseeable future, management continually
evaluates the need to make selective adjustments to work schedules in order to
balance production and sales.
Incoming orders continued to slow during the third quarter reflecting the
continuing soft retail business environment. Business strengthened during
August, culminating in a very strong Labor Day weekend sales period. Sales
remained strong until the tragic terrorist attacks on our nation on September
11, 2001. The Company expects that the already difficult economic climate will
be further dampened by the expected decline in consumer confidence resulting
from the attacks. Orders dropped sharply for the first ten days following the
attacks. Since the weekend of September 21, order rates have increased, but
have not yet reached pre-September 11 levels. The Company expects that
shipments during the fourth quarter of fiscal 2001 will reflect a decline of 12-
22% from the comparable 2000 period.
9
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Continued
Financial Condition, Liquidity, and Capital Resources
As of August 31, 2001, assets totaled $129.3 million, down from $133.5 million
at November 30, 2000. Stockholders' equity at August 31, 2001, was $75.7
million, compared to $75.6 million at November 30, 2000. The Company's long-
term debt, including current maturities, was $28.1 million at August 31, 2001
declining from $29.5 million at November 30, 2000. Working capital decreased to
$60.0 million as of August 31, 2001 from $60.7 million at the end of 2000,
reflecting lower trade receivables and inventories partially offset by an
improved cash position and lower current liabilities.
In the third quarter of 2001, the Company recognized a decrease in the aggregate
fair market value of its interest rate swap agreements, resulting from the
general decline in interest rates that occurred during the period. The decrease
in the aggregate fair market value of the agreements of $1.5 million (net of an
income tax benefit of $924,000) is reflected under the caption "accumulated
other comprehensive loss" in the balance sheet.
During the nine-month period ended August 31, 2001, cash generated from
operations ($16.2 million) and the sale of property ($2.8 million) funded an
increase in available cash ($8.2 million), capital expenditures ($6.5 million),
dividend payments ($1.7 million), net repayments of long-term debt ($1.4
million), and the purchase and retirement of common stock ($1.1 million). During
the comparable 2000 period, cash generated from operations ($6.9 million) and
net borrowings from the Company's revolving credit line ($5.5 million) funded
capital expenditures ($9.0 million), dividend payments ($1.9 million), the
acquisition of the remaining 50% interest in Triwood, Inc. ($801,000), and an
increase in available cash ($652,000).
Cash generated from operations of $16.2 million during the 2001 period increased
$9.3 million from $6.9 million in the comparable 2000 period. Lower payments to
suppliers and employees and lower tax payments were partially offset by less
cash received from customers and higher interest payments. Payments to
suppliers and employees decreased $20.2 million, as a result of reduced
production schedules and lower inventory levels. Cash received from customers
decreased $13.2 million as a result of lower sales. Tax payments decreased $3.1
million due principally to lower taxable income levels. Interest payments
increased $832,000 as a result of the term loan borrowed in September 2000.
Investing activities consumed $3.8 million during the 2001 period compared to
$9.8 million in the comparable 2000 period. In May 2001, the Company's
subsidiary, Triwood, Inc., sold land and a building that was being leased to a
third party for $2.7 million in cash. In June 2000, the Company acquired the
remaining 50% interest in Triwood for $801,000, net of cash received in the
purchase. Capital expenditures during the 2000 period ($9.0 million) were
higher compared to the 2001 period ($6.5 million) as the Company completed the
addition to its Central Distribution Center and continued its construction of
raw lumber grading, storage and drying facilities at the Maiden, North Carolina
plant during fiscal 2000.
The Company used cash of $4.2 million for financing activities in the 2001
period compared to generating cash of $3.6 million from financing activities in
the 2000 period. During 2001, the Company paid dividends of $1.7 million,
repaid $1.4 million (net) on long-term debt, and purchased and retired common
stock totaling $1.1 million. During the 2000 period, the Company borrowed $5.5
million (net) under its lines of credit and paid dividends of $1.9 million.
10
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Continued
Financial Condition, Liquidity, and Capital Resources - Continued
In June 2001, the Company's Board of Directors (the "Board") authorized the
repurchase of up to $3.0 million of the Company's common stock. Repurchases may
be made from time to time in the open market, or in privately negotiated
transactions, at prevailing market prices that the Company deems appropriate.
Through September 25, 2001, the Company had repurchased 253,000 shares at a
total cost of $2.2 million or an average of $8.52 per share.
At its September 2001 meeting, the Board authorized the repurchase of an
additional $2.2 million of the Company's common stock (for a total of up to $3.0
million). Based on the market value of the common stock as of September 25,
2001, the current $3.0 million authorization would allow the Company to
repurchase approximately 5.0% of the 7.4 million shares outstanding, or 7.4% of
the Company's outstanding shares excluding the 2.4 million shares held by the
ESOP.
In addition to any purchases that may be made under the stock repurchase
program, the Company also expects to repurchase 40,000 shares of common stock
during the fourth quarter of 2001, from some of the employees terminated in the
Martinsville downsizing, at a total cost of approximately $719,000 as required
by the ESOP.
At August 31, 2001, the Company had $10.0 million available under its revolving
line of credit and $11.6 million of availability under additional lines of
credit to fund working capital needs. The Company believes it has the financial
resources needed to meet business requirements for the foreseeable future
including capital expenditures, working capital, purchases under the stock
repurchase program, and dividends on the Company's common stock.
Forward-Looking Statements
Certain statements made in this report are not based on historical facts, but
are forward-looking statements. These statements can be identified by the use
of forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy. These statements
reflect the Company's reasonable judgment with respect to future events and are
subject to risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Such risks and
uncertainties include the cyclical nature of the furniture industry,
fluctuations in the price of lumber which is the most significant raw material
used by the Company, competition in the furniture industry, capital costs and
general economic or business conditions, either nationally or internationally.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's obligations under its lines of credit, industrial revenue bonds,
and term loan bear interest at variable rates. The Company has entered into
interest rate swap agreements that, in effect, fix the rate of interest on the
industrial revenue bonds at 4.7% through 2006 and on the term loan at 7.4%
through 2010. As of August 31, 2001, $7.0 million was outstanding under the
Company's industrial revenue bonds and approximately $21.1 million was
outstanding under the term loan. No balance was outstanding under the Company's
lines of credit as of August 31, 2001. A 10% fluctuation in market interest
rates would not have a material impact on the Company's results of operations or
financial condition.
11
HOOKER FURNITURE CORPORATION
PART II. OTHER INFORMATION
Item 5. Other Information
At its September 2001 meeting, the Board authorized the repurchase of an
additional $2.2 million of the Company's common stock (for a total of up to $3.0
million). Based on the market value of the common stock as of September 25,
2001, the current $3.0 million authorization would allow the Company to
repurchase approximately 5.0% of the 7.4 million shares outstanding, or 7.4% of
the Company's outstanding shares excluding the 2.4 million shares held by the
Company's Employee Stock Ownership Plan.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
Form 8-K, filed August 30, 2001, announcing the return to 40-hours-per-week work
schedules beginning September 10 for the Company's manufacturing employees in
Virginia and North Carolina and a 100-employee workforce reduction at the
Company's Martinsville, Virginia plant.
12
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOOKER FURNITURE CORPORATION
Date: October 11, 2001 By: /s/ E. Larry Ryder
--------------------------------
E. Larry Ryder
Executive Vice President -
Finance and Administration
(Principal Financial and Accounting
Officer)
13