What changed in this filing

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Item 1. Financial Statements

2020-12-10 compared with 2020-09-09 · 73 added, 62 removed, 385 unchanged (26% of the section changed)

43 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Cost of sales

4 unchanged sentences

Operating income / (loss)

Other expense, net

Other income, net

Interest expense, net

10 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Net income/(loss)

Other comprehensive income (loss):

Gain on pension plan settlement

Income tax effect on settlement

Amortization of actuarial loss

6 unchanged sentences

(In thousands)

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Operating Activities:

4 unchanged sentences

Depreciation and amortization

Gain on pension settlement

Gain on disposal of assets

20 unchanged sentences

Proceeds received on life insurance policies

Net cash used in investing activities

Net cash provided by/(used in) investing activities

Financing Activities:

9 unchanged sentences

Non-cash transactions:

Decrease in lease liabilities arising from obtaining right-of-use assets

Increase in lease liabilities arising from obtaining right-of-use assets

Increase in property and equipment through accrued purchases

7 unchanged sentences

Balance at February 3, 2019

Gain on pension settlement, net of tax of $ 124

Unrealized loss on defined benefit plan, net of tax of $ 27

3 unchanged sentences

Recognition of PSUs as equity-based awards

Balance at August 4, 2019

Balance at November 3, 2019

Balance at February 2, 2020

4 unchanged sentences

Performance-based restricted stock units cost

Balance at August 2, 2020

Balance at November 1, 2020

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

2 unchanged sentences

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

For the Twenty-Six Weeks Ended August 2, 2020

For the Thirty-Nine Weeks Ended November 1, 2020

Preparation of Interim Financial Statements

9 unchanged sentences

Operating results for the interim periods reported herein may not be indicative of the results expected for the fiscal year.

The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the 2021 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “second quarter” or “quarterly period”) that began May 4, 2020, and the twenty-six week period (also referred to as “six months”, “six-month period” or “first half”) that began February 3, 2020, which both ended August 2, 2020.

This report discusses our results of operations for this period compared to the 2020 fiscal year thirteen-week period that began May 6, 2019 and the twenty-six week period that began February 4, 2019, which both ended August 4, 2019;

and our financial condition as of August 2, 2020 compared to February 2, 2020.

The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the 2021 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “third quarter” or “quarterly period”) that began August 3, 2020, and the thirty-nine week period (also referred to as “nine months”, “nine-month period” or “year-to-date period”) that began February 3, 2020, which both ended November 1, 2020.

This report discusses our results of operations for this period compared to the 2020 fiscal year thirteen-week period that began August 5, 2019 and the thirty-nine week period that began February 4, 2019, which both ended November 3, 2019;

and our financial condition as of November 1, 2020 compared to February 2, 2020.

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

3 unchanged sentences

In the fourth quarter of fiscal 2020, we updated our reportable segments.

Consequently, the segment disclosures in this filing have been recast to reflect these changes and therefore differ from prior quarterly filings.

Consequently, the segment disclosures in this filing have been recast to reflect these changes and therefore differ from prior year quarterly filings.

See Note 13 Segment Information for additional details.

12 unchanged sentences

We elected to adopt ASU 2019-12 on February 3, 2020, the first day of our 2021 fiscal year.

The adoption of this standard impacted our condensed consolidated balance sheets and statements of operations by $5.4 million.

The adoption of this standard resulted in additional $4.0 million of income tax benefit upon adoption.

See Note 12 Income Taxes for additional details.

32 unchanged sentences

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

As of August 2, 2020 and February 2, 2020, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs.

As of November 1, 2020 and February 2, 2020, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs.

The fair value of the Company-owned life insurance is determined by inputs that are readily available in public markets or can be derived from information available in publicly quoted markets.

Additionally, the fair value of the Company-owned life insurance is marked to market each reporting period and any change in fair value is reflected in income for that period.

Our assets measured at fair value on a recurring basis at August 2, 2020 and February 2, 2020, were as follows:

Fair value at August 2, 2020

Our assets measured at fair value on a recurring basis at November 1, 2020 and February 2, 2020, were as follows:

Fair value at November 1, 2020

Fair value at February 2, 2020

8 unchanged sentences

As a result of our intangible asset valuation analysis, in the first quarter of fiscal 2021, we recorded $ 44.3 million non-cash impairment charges including $ 23.2 million to Home Meridian goodwill, $ 16.4 million to Shenandoah goodwill and $ 4.8 million to certain of Home Meridian segment’s trade names.

Twenty-Six Weeks Ended

August 2, 2020

Thirty-Nine Weeks Ended

November 1, 2020

February 2, 2020

22 unchanged sentences

Balance at February 2, 2020

Balance at August 2, 2020

For the remainder of fiscal 2021, amortization expense is expected to be approximately $ 1.2 million.

Balance at November 1, 2020

For the remainder of fiscal 2021, amortization expense is expected to be approximately $ 596,000 .

In fiscal 2020, we adopted Accounting Standards Codification Topic 842 Leases.

We recognized sub-lease income of $ 144,000 for the three-month period and $ 288,000 for the six-month period, both ended August 2, 2020.

The components of lease cost and supplemental cash flow information for leases for the three-months and six-months ended August 2, 2020 were:

We recognized sub-lease income of $ 144,000 for the three-month period and $ 432,000 for the nine-month period, both ended November 1, 2020.

The components of lease cost and supplemental cash flow information for leases for the three-month and nine-month ended November 1, 2020 were:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 2, 2020

August 4, 2019

August 2, 2020

August 4, 2019

Thirty-Nine Weeks Ended

November 1, 2020

November 3, 2019

November 1, 2020

November 3, 2019

Operating lease cost

3 unchanged sentences

Operating cash outflows

The right-of-use assets and lease liabilities recorded on our Condensed Consolidated Balance Sheets as of August 2, 2020 were:

August 2, 2020

The right-of-use assets and lease liabilities recorded on our Condensed Consolidated Balance Sheets as of November 1, 2020 were:

November 1, 2020

February 2, 2020

11 unchanged sentences

None of the modifications had a material effect on our condensed consolidated financial statements or results of operations.

The following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in the condensed consolidated balance sheets on August 2, 2020:

The following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in the condensed consolidated balance sheets on November 1, 2020:

Undiscounted Future Operating Lease Payments

4 unchanged sentences

Present value of lease payments

As of August 2, 2020, we did not have any additional operating or finance leases that had not yet commenced.

As of August 2, 2020, we had an aggregate $ 25.7 million available under the Existing Revolver to fund working capital needs.

Standby letters of credit in the aggregate amount of $ 4.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the revolving credit facility as of August 2, 2020.

There were no additional borrowings outstanding under the Existing Revolver as of August 2, 2020.

As of November 1, 2020, the Company has an additional lease for a warehouse in Georgia that had not yet commenced with estimated future minimum rental commitments of approximately $ 28 million.

This lease is expected to commence in December 2021 with lease term of up to 10 years.

Since the lease has not commenced, the undiscounted amounts are not included in the table above.

As of November 1, 2020, we had an aggregate $ 25.7 million available under the Existing Revolver to fund working capital needs.

There were no additional borrowings outstanding under the Existing Revolver as of November 1, 2020.

We currently have one unsecured term loan and one secured term loan outstanding and a revolving credit facility.

The term loans are related to the Home Meridian acquisition.

The full remaining principal amounts of $ 27.2 million on our term loans are due on February 1, 2021.

We expect to enter into a new credit facility on or before the expiration of the current agreement.

The full remaining principal amounts of $ 25.7 million on our term loans are due on or before February 1, 2021.

We expect to pay off our term loans in full and enter into a new credit facility on or before the expiration of the current agreement.

Subsequent to the end of the fiscal 2021 third quarter, the Existing Revolver was amended to increase the sublimit of the facility available for the issuance of letters of credit from $ 4 million to $ 10 million in order to support import purchases.

Employee Benefit Plans

5 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Net periodic benefit costs

2 unchanged sentences

Expected return on pension plan assets

Expected administrative expenses

Pension plan administrative expenses

Consolidated net periodic benefit costs

The SRIP and SERP plans are unfunded plans.

In fiscal 2021, we paid $ 181 ,000 in the second quarter and $ 359 ,000 in the first half and expect to pay a total of approximately $ 370 ,000 in benefit payments from our general assets during the remainder of fiscal 2021 to fund SRIP and SERP payments.

In fiscal 2021, we paid $ 179 ,000 in the third quarter and $ 538 ,000 in the first nine months and expect to pay a total of approximately $ 191 ,000 in benefit payments from our general assets during the remainder of fiscal 2021 to fund SRIP and SERP payments.

Earnings Per Share

18 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Net income/(loss)

7 unchanged sentences

Diluted earnings/(loss) per share

*Due to the fiscal 2021 year-to-date net loss, approximately 31,000 shares would have been antidilutive and are therefore excluded from the calculation of earnings per share for the twenty-six weeks ended August 2, 2020.

We recorded income tax expense of $ 1.6 million for the fiscal 2021 second quarter compared to $ 1.2 million for the comparable prior year period.

The effective tax rates for the fiscal 2021 and 2020 second quarters were 21.8 % and 23.1 %, respectively.

We recorded income tax benefit of $ 9.3 million for the fiscal 2021 first half, of which income tax benefit of $ 10.7 million was recorded related to goodwill and trade name impairment charges, compared to $ 1.8 million income tax expense for the comparable prior year period.

respectively.

The effective tax rates for the first half of fiscal 2021 and 2020 were 24.2 % and 22.3 %.

* Due to the fiscal 2021 year-to-date net loss, approximately 92,000 shares would have been antidilutive and are therefore excluded from the calculation of earnings per share for the thirty-nine weeks ended November 1, 2020.

We recorded income tax expense of $ 3.0 million for the fiscal 2021 third quarter compared to $ 1.1 million for the comparable prior year period.

The effective tax rates for the fiscal 2021 and 2020 third quarters were 22.9 % and 21.4 %, respectively.

We recorded income tax benefit of $ 6.3 million for the fiscal 2021 first nine months, of which income tax benefit of $ 10.7 million was recorded related to goodwill and trade name impairment charges, compared to $ 2.8 million income tax expense for the comparable prior year period.

The effective tax rates for the first nine months of fiscal 2021 and 2020 were 24.8 % and 21.9 %, respectively.

An entity is required to make its best estimate of the annual effective tax rate for the full fiscal year at the end of each interim period and to use this rate to calculate its income taxes on a year-to-date basis.

1 unchanged sentence

ASU 2019-12 removes this exception and no longer limits the computed benefit.

We elected to early adopt ASU 2019-12 in the first quarter of fiscal 2021 and recognized an additional $ 5.4 million of tax benefit that exceeds our anticipated annual income tax benefit in the fiscal 2021 first half.

The net unrecognized tax benefits as of August 2, 2020 and February 2, 2020, which, if recognized, would affect our effective tax rate are $ 3 ,000.

We elected to early adopt ASU 2019-12 in the first quarter of fiscal 2021 and recognized an additional $ 4.0 million of income tax benefits upon adoption.

In the nine months period, we recognized additional $ 2.4 million of income tax benefit.

The net unrecognized tax benefits as of November 1, 2020 and February 2, 2020, which, if recognized, would affect our effective tax rate are $ 3 ,000.

Tax years ending January 29, 2017 through February 2, 2020 remain subject to examination by federal and state taxing authorities.

24 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 2, 2020

August 4, 2019

August 2, 2020

August 4, 2019

Thirty-Nine Weeks Ended

November 1, 2020

November 3, 2019

November 1, 2020

November 3, 2019

Hooker Branded

31 unchanged sentences

$ 169 $ 1,086 $ 642 $ 4,745

Depreciation & Amortization

& Amortization

Hooker Branded

5 unchanged sentences

$ 1,687 $ 1,788 $ 5,052 $ 5,260

As of August 2,

As of November 1,

As of February 2,

8 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 2, 2020

August 4, 2019

August 2, 2020

August 4, 2019

Thirty-Nine Weeks Ended

November 1, 2020

November 3, 2019

November 1, 2020

November 3, 2019

Subsequent Events

On September 2, 2020 , our board of directors declared a quarterly cash dividend of $ 0.16 per share, payable on September 30, 2020 to shareholders of record at September 18, 2020 .

Loan agreement

On November 4, 2020, we entered the Second Amendment to the Second Amended and Restated Loan Agreement (the “Agreement”) to amend certain provisions of the Existing Loan Agreement.

The Agreement was amended to increase the sublimit of the facility available for the issuance of letters of credit from $ 4 million to $ 10 million in order to support import purchases.

On December 2, 2020 , our board of directors declared a quarterly cash dividend of $ 0.18 per share, payable on December 31, 2020 to shareholders of record at December 16, 2020 .

This represents a 12.5 % increase over the previous quarterly dividend and the fifth consecutive annual dividend increase.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements