What changed in this filing

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Item 9A. Controls and Procedures

2022-04-15 compared with 2021-04-16 · 211 added, 298 removed, 881 unchanged (37% of the section changed)

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OTHER INFORMATION

Hooker Furniture Corporation

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable.

Hooker Furnishings Corporation

In accordance with General Instruction G (3) of Form 10-K, most of the information called for by Items 10, 11, 12, 13 and 14 of Part III will be incorporated by reference to the Company’s definitive Proxy Statement for its Annual Meeting of Shareholders scheduled to be held June 7, 2022 (the “2022 Proxy Statement”), as set forth below.

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PRINCIPAL ACCOUNTING FEES AND SERVICES

Information relating to this item will be set forth under the caption “Proposal Three- Ratification of Selection of Independent Registered Public Accounting Firm” in the 2021 Proxy Statement and is incorporated herein by reference.

Hooker Furniture Corporation

Information relating to this item will be set forth under the caption “Proposal Two - Ratification of Selection of Independent Registered Public Accounting Firm” in the 2022 Proxy Statement and is incorporated herein by reference.

Hooker Furnishings Corporation

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of January 31, 2021 and February 2, 2020

Consolidated Statements of Operations for the fifty-two-week period ended January 31, 2021, the fifty-two-week period ended February 2, 2020, and the fifty-three-week period ended February 3, 2019

Consolidated Statements of Comprehensive Income/(Loss) for the fifty-two-week period ended January 31, 2021, the fifty-two-week period ended February 2, 2020, and the fifty-three-week period ended February 3, 2019

Consolidated Statements of Cash Flows for the fifty-two-week period ended January 31, 2021, the fifty-two-week period ended February 2, 2020, and the fifty-three-week period ended February 3, 2019

Consolidated Statements of Shareholders’ Equity for the fifty-two-week period ended January 31, 2021, the fifty-two-week period ended February 2, 2020, and the fifty-three-week period ended February 3, 2019

Consolidated Balance Sheets as of January 30, 2022 and January 31, 2021

Consolidated Statements of Operations for the fifty-two-week periods ended January 30, 2022, January 31, 2021 and February 2, 2020

Consolidated Statements of Comprehensive Income/(Loss) for the fifty-two-week periods ended January 30, 2022, January 31, 2021 and February 2, 2020

Consolidated Statements of Cash Flows for the fifty-two-week periods ended January 30, 2022, January 31, 2021 and February 2, 2020

Consolidated Statements of Shareholders’ Equity for the fifty-two-week periods ended January 30, 2022, January 31, 2021 and February 2, 2020

Notes to Consolidated Financial Statements

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Financial Statement Schedules have been omitted because the information required has been separately disclosed in the consolidated financial statements or related notes.

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

000-25349) for the quarter ended February 28, 2003)

Amended and Restated Articles of Incorporation of the Company, as amended September 16, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Form 10-Q (SEC File No.

000-25349) for the quarter ended October 31, 2021)

Amended and Restated Bylaws of the Company as amended December 10, 2013 (incorporated by reference to Exhibit 3.2 of the Company’s Form 10-K (SEC File No.

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000-25349) filed on February 13, 2012)*

Employment Agreement, dated June 4, 2018, between Anne Jacobsen and the Company (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q (SEC File No.

000-25349) filed on December 6, 2018)*

Employment Agreement, dated June 25, 2018, between Donald Lee Boone and the Company (incorporated by reference to Exhibit 10.2 of the Company’s Form 10-Q (SEC File No.

Employment Agreement, dated June 4, 2018, between Anne Jacobsen (now Anne Smith) and the Company (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q (SEC File No.

000-25349) filed on December 6, 2018)*

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000-25349) filed on January 28, 2021)

Asset Purchase Agreement dated January 31, 2022 by and among the Company, Sunset West, Wes Stewart, Heath Malone and Martin Jamroz (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (SEC File No.

000-25349) filed on February 1, 2022)

List of Subsidiaries:

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Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

The following financial statements from the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2021, formatted in Extensible Business Reporting Language (“XBRL”):

(i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of comprehensive income/(loss), (iv) consolidated statements of cash flows, (v) consolidated statements of shareholders’ equity and (vi) the notes to the consolidated financial statements, tagged as blocks of text (filed herewith)

The following financial statements from the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2022, formatted in Interactive Extensible Business Reporting Language (“IXBRL”):

(i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of comprehensive income, (iv) consolidated statements of cash flows, (v) consolidated statements of shareholders’ equity and (vi) the notes to the consolidated financial statements, tagged as blocks of text (filed herewith)

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

*Management contract or compensatory plan

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HOOKER FURNITURE CORPORATION

HOOKER FURNISHINGS CORPORATION

April 15, 2022

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April 15, 2022

Director (Board Chair)

April 16, 2021

Williamson, Jr

Director (Board Chair)

April 15, 2022

Williamson, Jr.

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Management’s Report on Internal Control Over Financial Reporting

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of January 31, 2021 and February 2, 2020

Consolidated Statements of Operations for the fifty-two-week period ended January 31, 2021, the fifty-two-week period ended February 2, 2020 and the fifty-three-week period ended February 3, 2019

Consolidated Statements of Comprehensive Income / (Loss) for the fifty-two-week period ended January 31, 2021, the fifty-two-week period ended February 2, 2020 and the fifty-three-week period ended February 3, 2019

Consolidated Statements of Cash Flows for the fifty-two-week period ended January 31, 2021, the fifty-two-week period ended February 2, 2020 and the fifty-three-week period ended February 3, 2019

Consolidated Statements of Shareholders’ Equity for the fifty-two-week period ended January 31, 2021, the fifty-two-week period ended February 2, 2020 and the fifty-three-week period ended February 3, 2019

Reports of Independent Registered Public Accounting Firm (PCAOB ID 185 )

Consolidated Balance Sheets as of January 30, 2022 and January 31, 2021

Consolidated Statements of Operations for the fifty-two-week periods ended January 30, 2022, January 31, 2021 and February 2, 2020

Consolidated Statements of Comprehensive Income / (Loss) for the fifty-two-week periods ended January 30, 2022, January 31, 2021 and February 2, 2020

Consolidated Statements of Cash Flows for the fifty-two-week periods ended January 30, 2022, January 31, 2021 and February 2, 2020

Consolidated Statements of Shareholders’ Equity for the fifty-two-week periods ended January 30, 2022, January 31, 2021 and February 2, 2020

Notes to Consolidated Financial Statements

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To the Shareholders of

Hooker Furniture Corporation

Hooker Furnishings Corporation

Martinsville, Virginia

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To the Shareholders and Board of Directors

Hooker Furniture Corporation:

Hooker Furnishings Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Hooker Furniture Corporation and subsidiaries (the Company) as of January 31, 2021 and February 2, 2020, the related consolidated statements of operations, comprehensive income/(loss), shareholders’ equity, and cash flows for each of the years in the three‑year period ended January 31, 2021, and the related notes collectively, the consolidated financial statements.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2021 and February 2, 2020, and the results of its operations and its cash flows for each of the years in the three‑year period ended January 31, 2021, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Hooker Furnishings Corporation and subsidiaries (the Company) as of January 30, 2022 and January 31, 2021, the related consolidated statements of operations, comprehensive income/(loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended January 30, 2022, and the related notes collectively, the consolidated financial statements.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 30, 2022 and January 31, 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended January 30, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 16, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessment

As discussed in Note 9 to the consolidated financial statements, the goodwill balance as of January 31, 2021 was $0.5 million related to the Shenandoah reporting unit.

During the first quarter ended May 3, 2020, the Company recorded a goodwill impairment charge of $23.2 million and $16.4 million related to the Home Meridian and Shenandoah reporting units, respectively.

As discussed in Note 2, the Company performs goodwill impairment testing on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired.

As of May 3, 2020, management determined it was likely that the carrying values of the Home Meridian and Shenandoah reporting units exceeded their respective fair values and performed a goodwill impairment test.

To estimate the fair value of its reporting units, the Company used an income and market approach, specifically the discounted cash flow method, guideline public company method, and guideline transaction method.

We identified the evaluation of goodwill for impairment for the Home Meridian and Shenandoah reporting units as a critical audit matter.

Subjective and challenging auditor judgment was required to evaluate the selection of forecasted revenue growth rates and discount rates used to estimate the fair value of the reporting units as they represent subjective determinations of future market and economic conditions.

Additionally, the audit effort associated with the evaluation of goodwill for impairment for the Home Meridian and Shenandoah reporting units required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s goodwill impairment evaluation process.

This included controls related to the development of the forecasted revenue growth rates and discount rate assumptions.

We performed sensitivity analyses over the forecasted revenue growth rates and discount rate assumptions to assess their impact on the Company’s determination of fair value for the Home Meridian and Shenandoah reporting units.

We evaluated the Company’s ability to forecast revenue growth rates for the reporting units by comparing the forecasted revenue growth assumptions to historical growth rates, considering future market and economic conditions.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the discount rates used in the determination of fair value, by comparing them against a discount rate range that was independently developed using publicly available market data for comparable entities

• testing the estimate of the reporting units’ fair value using the Company’s cash flow forecast for the reporting units, and discount rates, and comparing the results to the Company’s determination of fair value.

Impairment of non-amortizable intangible assets in the Home Meridian segment

As discussed in Note 9 to the consolidated financial statements, the non-amortizable intangible asset balance as of February 2, 2020 was $8.4 million, of which $6.7 million related to the Home Meridian reportable segment.

During the first quarter ended May 3, 2020, the Company recorded an intangible asset impairment charge of $4.8 million related to the Home Meridian trade names.

The Company performs impairment testing on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired.

As of May 3, 2020, management determined it was likely that the carrying value of each trade name exceeded its fair value and performed a trade name impairment test.

To value the non-amortizing intangible assets, the Company used the income approach, specifically the relief-from-royalty method.

We identified the evaluation of the impairment of non-amortizable intangible assets in the Home Meridian segment as a critical audit matter.

Subjective and challenging auditor judgment was required to evaluate the selection of forecasted revenue growth rates, assumed royalty rates, and discount rates, used to estimate the fair value of the non-amortizable intangible assets in the Home Meridian segment as they represent subjective determinations of future market and economic conditions.

Additionally, the audit effort associated with the evaluation of the trade names for impairment required specialized skills and knowledge.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Customer allowances for the Clubs channel of the Home Meridian segment

As discussed in Notes 2 and 5 to the consolidated financial statements, the customer allowances balance as of January 30, 2022 was $7.3 million, which included allowances related to the Clubs channel of the Home Meridian segment.

These allowances are for unprocessed claims received and anticipated future claims related to products sold in the Clubs channel.

Estimates of these anticipated future claims are based on historical experience with the Clubs channel customers.

We identified the evaluation of the customer allowances for the Clubs channel of the Home Meridian segment as a critical audit matter.

Subjective and challenging auditor judgment was required to evaluate the Company’s customer allowances estimate given the Company’s historical volatility of customer allowance claims in the Clubs channel.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s non-amortizable intangible asset impairment assessment process.

This included controls related to the development of the forecasted revenue growth rates, assumed royalty rate, and discount rate assumptions.

We performed sensitivity analyses over the revenue growth rates and discount rate assumptions to assess their impact on the Company’s determination of fair value for the non-amortizable intangible assets in the Home Meridian segment.

We evaluated the reasonableness of management’s forecasted revenue growth rates by comparing the forecasts to historical revenue growth rates, current industry conditions and growth plans.

We compared the Company’s historical revenue forecasts to actual results to assess the Company’s ability to accurately forecast.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s assumed royalty rates by comparing the selected royalty rates to independently sourced royalty rates for trademarks within the furniture industry and performing a profit split analysis and assessing the resulting royalty rates

• evaluating the discount rates used in the valuation, by comparing them against a discount rate range that was independently developed using publicly available market data for comparable entities

• testing the estimate of the trade names’ fair values using the Company’s estimated cash flow forecast for the trade names, assumed royalty rates, and discount rates and comparing the results to the Company’s fair value estimates.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to estimate and record the customer allowances, including the assumption related to the use of historical experience with the Clubs channel customers.

We evaluated the estimated customer allowances by testing the completeness, accuracy and relevance of underlying historical customer allowances data used by management to develop the customer allowances and by performing sensitivity analyses to assess the impact of changes in certain assumptions on the determination of the customer allowances.

We have served as the Company’s auditor since 2003.

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To the Shareholders and Board of Directors

Hooker Furniture Corporation:

Hooker Furnishings Corporation:

Opinion on Internal Control Over Financial Reporting

We have audited Hooker Furniture Corporation and subsidiaries’ (the Company) internal control over financial reporting as of January 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have audited Hooker Furnishings Corporation and subsidiaries' (the Company) internal control over financial reporting as of January 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2021 and February 2, 2020, the related consolidated statements of operations, comprehensive income/(loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated April 16, 2021 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 30, 2022 and January 31, 2021, the related consolidated statements of operations, comprehensive income/(loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended January 30, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated April 15, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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April 15, 2022

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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Other accrued expenses

Current portion of term loans

Total current liabilities

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Lease liabilities (See note 10)

Long term debt (See note 12)

Total long-term liabilities

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See accompanying Notes to Consolidated Financial Statements.

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

For the 52 Week Period Ended January 31, 2021, the 52 Week Period Ended February 2, 2020, and the 53 Week Period Ended February 3, 2019.

For the 52 Week Periods Ended January 30, 2022, January 31, 2021 and February 2, 2020

Cost of sales

Casualty loss

Selling and administrative expenses

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Intangible asset amortization

Operating (loss)/income

Operating income/(loss)

Other income, net

Interest expense, net

(Loss)/income before income taxes

Income tax (benefit)/expense

Net (loss)/income

(Loss)/Earnings per share:

Income/(loss) before income taxes

Income tax expense/(benefit)

Net income/(loss)

Earnings/(loss) per share:

Weighted average shares outstanding:

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See accompanying Notes to Consolidated Financial Statements.

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)

(In thousands)

For the 52 Week Period Ended January 31, 2021, the 52 Week Period Ended February 2, 2020, and the 53 Week Period Ended February 3, 2019.

Net (Loss)/Income

For the 52 Week Periods Ended January 30, 2022, January 31, 2021 and February 2, 2020

Net Income/(Loss)

Other comprehensive income/(loss):

Amortization of actuarial (loss)

Amortization of actuarial gain / (loss)

Income tax effect on amortization

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Adjustments to net periodic benefit cost

Reclassification of tax effects due to the adoption of ASU 2018-02

Total Comprehensive (Loss)/Income

Total Comprehensive Income/(Loss)

See accompanying Notes to Consolidated Financial Statements.

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the 52 Week Period Ended January 31, 2021, the 52 Week Period Ended February 2, 2020, and the 53 Week Period Ended February 3, 2019.

For the 52 Week Periods Ended January 30, 2022, January 31, 2021 and February 2, 2020

Operating Activities:

Net (loss)/income

Net income/(loss)

Adjustments to reconcile net income to net cash

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Gain on pension settlement

(Gain)/Loss on disposal of assets

Proceeds from casualty loss

Deferred income tax (benefit)/expense

Gain on disposal of assets

Deferred income tax expense/(benefit)

Non-cash restricted stock and performance awards

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Deferred compensation

Other long-term liabilities

Net cash provided by operating activities

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Financing Activities:

Payments for long-term debt

Cash dividends paid

Payments for long-term debt

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of year

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Supplemental schedule of cash flow information:

Interest paid, net

Income taxes paid, net

Interest paid, net

Supplemental schedule of noncash investing activities:

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See accompanying Notes to Consolidated Financial Statements.

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands, except per share data)

For the 52 Week Period Ended January 31, 2021, the 52 Week Period Ended February 2, 2020, and the 53 Week Period Ended February 3, 2019.

For the 52 Week Periods Ended January 30, 2022, January 31, 2021 and February 2, 2020

Comprehensive

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Income / (Loss)

Balance at January 28, 2018

Prior year adjustment for ASU 2014-09 and 2018-02

Unrealized loss on defined benefit plan, net of tax of $ 73

Cash dividends paid and accrued ($ 0.57 per share)

Restricted stock grants, net of forfeitures

Restricted stock compensation cost

Balance at February 3, 2019

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Balance at January 31, 2021

Unrealized gain on defined benefit plan, net of tax of $ 237

Cash dividends paid and accrued ($ 0.74 per share)

Restricted stock grants, net of forfeitures

Restricted stock compensation cost

Performance-based restricted stock units cost

Balance at January 30, 2022

See accompanying Notes to Consolidated Financial Statements.

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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NOTE 1 – RECENTLY ADOPTED ACCOUNTING STANDARDS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326).

This update seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date.

The amendments require an entity to replace the incurred loss impairment methodology in current GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

We adopted the provisions of Topic 326 on February 3, 2020, the first day of our 2021 fiscal year using the modified retrospective transition approach.

The adoption of this standard did not have a material effect on our consolidated financial statements or results of operations.

In December 2019, the FASB issued ASU 2019-12, Income Tax (Topic 740) – Simplifying the Accounting for Income Taxes.

The amendments in this update simplify the accounting for income taxes by removing certain exceptions for intra-period tax allocation, the recognition of deferred tax liabilities after an investment in a foreign entity transitions to or from the equity method, and the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

The amendments also introduce new guidance on determining how to apply the income tax guidance to franchise taxes that are partially based on income, clarifying the accounting for transactions that result in a step-up in the tax basis of goodwill, and the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period.

The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

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

While the adoption of ASU 2019-12 impacted the tax benefit recognized in our interim financial statements, it had no material impact on our annual financial statements.

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2018-14, Compensation —Retirement Benefits —Defined Benefit Plans —General (Subtopic 715-20) —Disclosure Framework —Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”).

The amendments in this update change the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans.

It eliminates requirements for certain disclosures that are no longer considered cost beneficial and requires new disclosures that the FASB considers pertinent.

The guidance is effective for fiscal years ending after December 15, 2020.

We adopted this guidance in the fiscal 2022 first quarter.

The adoption of ASU 2018-14 did not have a material impact on our consolidated financial statements or disclosures.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Hooker Furniture Corporation and subsidiaries (the “Company,” “we,” “us” and “our”) design, import, manufacture and market residential household furniture, hospitality and contract furniture for sale to wholesale and retail merchandisers located principally in North America.

Hooker Furnishings Corporation and subsidiaries (the “Company,” “we,” “us” and “our”) design, import, manufacture and market residential household furniture, hospitality and contract furniture for sale to wholesale and retail merchandisers located principally in North America.

Consolidation

The consolidated financial statements include the accounts of Hooker Furniture Corporation and our wholly owned subsidiaries.

The consolidated financial statements include the accounts of Hooker Furnishings Corporation and our wholly owned subsidiaries.

All material intercompany accounts and transactions have been eliminated in consolidation.

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Trade Accounts Receivable

Accounts receivable are reported net of the allowance for doubtful accounts and sales-related allowances.

Substantially all of our trade accounts receivable are due from retailers and dealers that sell residential home furnishings or commercial purchasers of our hospitality and senior living products, and consist of a large number of entities with a broad geographic dispersion.

We perform credit evaluations of our customers and generally do not require collateral.

We regularly review and revise accounts receivable for doubtful accounts and customer allowances based upon historical bad debts and customer allowances and any agreements with specific customers.

These trade accounts receivable are reported net of customer allowances and an allowance for doubtful accounts.

Reserves for customer allowances comprise the majority of the reduction of our gross trade accounts receivable to the estimated fair value reported on the face of our financial statements.

We regularly review and revise customer allowances based on unprocessed claims received and current and historical activity and any agreements made with specific customers.

In the Home Meridian segment, Clubs channel customers drive most of the customer allowance activity due to their consumer-facing product return policies.

We base anticipated future claims on historical experience with these customers.

We regularly review and revise accounts receivable for doubtful accounts based upon historical bad debts .

If the financial condition of a customer or customers were to deteriorate, resulting in an impairment of their ability to make payments, additional bad debt allowances may be required.

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Our practice is to straight-line the sub-lease income over the term of the sublease.

Our leases have remaining lease terms of less than one year to seven years, some of which include options to extend the leases for up to seven years .

Our leases have remaining lease terms of less than one year to ten years, some of which include options to extend the leases for up to ten years .

We have elected not to recognize ROU assets and lease liabilities that arise from short term leases for any class of underlying asset.

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Our amortizable intangible assets are related to the Shenandoah and Home Meridian acquisitions and includes customer relationships and trademarks.

Our indefinite lived assets include goodwill related to the Shenandoah and Home Meridian acquisitions, as well as the Bradington-Young and Sam Moore tradenames.

Our indefinite lived assets include goodwill related to the Shenandoah acquisition, as well as the Bradington-Young and Sam Moore tradenames.

We may acquire additional amortizable assets and/or indefinite lived intangible assets in the future.

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Cash Surrender Value of Life Insurance Policies

We own seventy-seven life insurance policies on certain of our current and former executives and other key employees.

We own seventy-four life insurance policies on certain of our current and former executives and other key employees.

These policies had a carrying value of $ 26.7 million at January 30, 2022 and have a face value of approximately $ 55 million as of that date.

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Gains on life insurance policies, which typically occur at the time a policy is redeemed, are included in the reconciliation of net income to net cash used in or provided by operating activities.

Substantially all of the cash value of our company owned life insurance is pledged as collateral for our secured term loan.

Revenue Recognition

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We also have arrangements with some dealers to reimburse them for a portion of their advertising costs, which provides advertising benefits to us.

Costs for these arrangements are expensed as incurred and are netted against net sales in our consolidated statements of operations and comprehensive income/(loss).

At times, tax law and generally accepted accounting principles differ in the treatment of certain income and expense items.

These items may be excluded or included in taxable income at different times than is required for GAAP or “book” reporting purposes.

These differences may be permanent or temporary in nature.

We determine our annual effective income tax rate based on pre-tax book income and permanent book and tax differences.

To the extent any book and tax differences are temporary in nature, that is, the book realization will occur in a different period than the tax realization, a deferred tax asset or liability is established.

To the extent a deferred tax asset is created, we evaluate our ability to realize this asset.

If we determine that we will not be able to fully utilize deferred tax assets, we establish a valuation reserve.

In assessing the realization of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

The ultimate realization of deferred tax assets is primarily dependent upon the generation of future taxable income during the periods in which those temporary differences reverse.

Currently, we have $ 14.2 million deferred tax assets related to net operating loss carryforwards that can be used to offset taxable income and reduce our income tax liabilities in the future periods.

All deferred tax assets and liabilities are classified as non-current on our consolidated balance sheets.

See Note 16 Income Taxes for additional details.

Costs for these arrangements are expensed as incurred and are netted against net sales in our consolidated statements of operations and comprehensive income.

Earnings Per Share

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2022 fiscal year and comparable terminology mean the fiscal year that began February 1, 2021 and ended January 30, 2022;

2021 fiscal year and comparable terminology mean the fiscal year that began February 3, 2020 and ended January 31, 2021;

2020 fiscal year and comparable terminology mean the fiscal year that began February 4, 2019 and ended February 2, 2020.

2019 fiscal year and comparable terminology mean the fiscal year that began January 29, 2018 and ended February 3, 2019.

NOTE 4 – CASUALTY LOSS

On May 18, 2018, the Martinsville/Henry County, Va.

area experienced torrential rains.

Two of our Hooker Brands segment warehouse facilities were damaged as a result.

No employees were injured and the casualty loss caused only a nominal disruption in our ability to fulfill and ship orders.

The costs associated with the recovery efforts exceeded our insurance deductible of $ 500,000 .

Consequently, we recorded a $ 500,000 casualty loss during the fiscal 2019 second quarter.

We incurred another $ 409 ,000 of repair and remediation-related expenses during the third quarter, which was recovered from our casualty insurer during the fourth quarter of fiscal 2019.

NOTE 5 – DOUBTFUL ACCOUNTS AND OTHER ACCOUNTS RECEIVABLE ALLOWANCES

NOTE 4 – DOUBTFUL ACCOUNTS AND CUSTOMER ALLOWANCES

The activity in the allowance for doubtful accounts was:

Fifty-Two Weeks Ended

Balance at beginning of year

2 unchanged sentences

Balance at end of year

The activity in other accounts receivable allowances was:

The activity in customer allowances was:

Fifty-Two Weeks Ended

Balance at beginning of year

4 unchanged sentences

NOTE 5 – ACCOUNTS RECEIVABLE

Trade accounts receivable

Receivable from factor

Other accounts receivable allowances

Gross accounts receivable

Customer allowances

Allowance for doubtful accounts

Accounts receivable

“Receivable from factor” represented amounts due with respect to factored accounts receivable for a single customer.

The agreement was discontinued in early fiscal 2021.

Trade accounts receivable

NOTE 6 – INVENTORIES

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Reduction to LIFO basis

If the first-in, first-out (FIFO) method had been used in valuing all inventories, net loss would have been $ 11.1 million in fiscal 2021, net income would have been $ 19.5 million in fiscal 2020 and $ 41.5 million in fiscal 2019.

We recorded LIFO income of $ 1.3 million in fiscal 2021, LIFO expense of $ 3.1 million in fiscal 2020 and $ 2.1 million in fiscal 2019.

At January 31, 2021 and February 2, 2020, we had $ 355 ,000 and $ 424 ,000, respectively, in consigned inventories, which are included in the “Finished furniture” line in the table above.

At January 31, 2021, we held $ 8.4 million in inventory outside of the United States, in China and in Vietnam.

At February 2, 2020, we held $ 9.6 million in inventory outside of the United States, in China and in Vietnam.

If the first-in, first-out (FIFO) method had been used in valuing all inventories, net income would have been $ 17.4 million in fiscal 2022, net loss would have been $ 11.1 million in fiscal 2021, and net income would have been $ 19.5 million in fiscal 2020.

We recorded LIFO expense of $ 7.4 million in fiscal 2022, LIFO income of $ 1.3 million in fiscal 2021, and LIFO expense of $ 3.1 million in fiscal 2020.

At January 30, 2022 and January 31, 2021, we had $ 8.9 million and $ 6.7 million, respectively, in consigned inventories, which are included in the “Finished furniture” line in the table above.

At January 30, 2022, we held $ 11.1 million in inventory outside of the United States, in Vietnam and China.

At January 31, 2021, we held $ 11.3 million in inventory outside of the United States, in Vietnam and China.

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT

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The activity in capitalized software costs was:

Fifty-Two Weeks

Fifty-Three Weeks

Fifty-Two Weeks Ended

Balance beginning of year

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Details of our non-amortizable intangible assets are as follows:

Fifty-Two Weeks Ended

January 30, 2022

February 2, 2020

January 31, 2021

Non-amortizable Intangible Assets

Home Meridian

Beginning Balance

Impairment Charges

Net Book Value

Beginning Balance

Impairment Charges

Net Book Value

Domestic Upholstery

Home Meridian

Total Goodwill

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Relationships

Balance at February 2, 2020

Balance at January 31, 2021

Balance at January 30, 2022

The estimated amortization expense associated with our amortizable intangible assets is expected to be as follows:

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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 January 31, 2021, and February 2, 2020, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs.

As of January 30, 2022, and January 31, 2021, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs.

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

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

Our assets measured at fair value on a recurring basis at January 31, 2021 and February 2, 2020, were as follows

Our assets measured at fair value on a recurring basis at January 30, 2022 and January 31, 2021, were as follows

Fair value at January 30, 2022

Fair value at February 2, 2020

Fair value at January 31, 2021

(In thousands)

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

We have a sub-lease at one of our warehouses and we recognized $ 576,000 sub-lease income in fiscal 2021.

The components of lease cost and supplemental cash flow information for leases in fiscal 2021 were:

We have a sub-lease at one of our warehouses and we recognized sub-lease income of $ 890,000 , $ 576,000 and $ 405,000 in fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

The components of lease cost and supplemental cash flow information for leases in fiscal 2022, 2021 and 2020 were:

Fifty-two Weeks Ended

January 30, 2022

January 31, 2021

February 2, 2020

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Operating cash outflows

The right-of-use assets and lease liabilities recorded on our Consolidated Balance Sheets as of January 31, 2021 and February 2, 2020 were:

The right-of-use assets and lease liabilities recorded on our Consolidated Balance Sheets as of January 30, 2022 and January 31, 2021 were:

January 30, 2022

February 2, 2020

January 31, 2021

Property and equipment

3 unchanged sentences

Total operating lease liabilities

The increase in right-of-use assets and lease liabilities is primarily due to the commencement of the operating lease at our new warehouse facility in Georgia during the fiscal 2022 third quarter.

Weighted-average remaining lease term is 8.3 years.

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The weighted-average discount rate is 1.91 %.

Due to the COVID-19 pandemic, we received concessions on several of our leases, including changes in lease terms and deferred rent payments.

We accounted for the concessions as lease modifications and used current LIBOR plus 1.5% for those leases.

The weighted-average discount rate decreased due to a decrease in LIBOR.

The following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in the consolidated balance sheet at January 30, 2022:

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Present value of lease payments

As of January 31, 2021, the Company had 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 Fall of 2021 with a 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 January 30, 2022, the Company had an additional lease for a showroom in High Point, North Carolina.

This lease is expected to commence in Fall of calendar 2022 with an initial lease term of 10 years and estimated future minimum rental commitments of approximately $ 23.7 million.

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

NOTE 11 – LONG-TERM DEBT

We paid off the term loans which were related to the Home Meridian acquisition in fiscal 2021 and currently have a $ 35 million revolving credit facility.

The credit facility was provided for in the amended and restated loan agreement (the “Original Loan Agreement”), which we entered into on February 1, 2016 with Bank of America, N.

(“BofA”) in connection with the Home Meridian Acquisition.

We entered a Second Amended and Restated Loan Agreement dated as of September 29, 2017 (the “Second Amended and Restated Loan Agreement”), a First Amendment to Second Amended and Restated Loan Agreement dated as of January 31, 2019, a Second Amendment to Second Amended and Restated Loan Agreement dated as of November 4, 2020, and a Third Amendment to the Second Amended and Restated Loan Agreement dated as of January 27, 2021.

Details of our revolving credit facility are outlined below:

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

We paid off the term loans which were related to the Home Meridian acquisition in fiscal 2021 and currently have a $ 35 million revolving credit facility (“Existing Revolver”).

The Existing Revolver is based on successive past amendments to previous BofA banking agreements which are collectively referred to as the “Previous Agreements.” Details of our Existing Revolver are outlined below:

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

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

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

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

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

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Limit capital expenditures to no more than $15.0 million during any fiscal year.

The Second Amended and Restated Loan Agreement also limits our right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions.

They also limit our right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions.

They do not restrict our ability to pay cash dividends on, or repurchase shares of our common stock, subject to our compliance with the financial covenants discussed above, if we are not otherwise in default under the agreements.

1 unchanged sentence

As of January 30, 2022, we had an aggregate $ 27.9 million available under the Existing Revolver to fund working capital needs.

Standby letters of credit in the aggregate amount of $ 6.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the revolving credit facility as of January 31, 2021.

Standby letters of credit in the aggregate amount of $ 7.1 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the Existing Revolver as of January 30, 2022.

There were no additional borrowings outstanding under the Existing Revolver as of January 30, 2022.

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Our contributions to the plan amounted to $ 1.4 million in fiscal 2022, $ 1.3 million in fiscal 2021, and $ 1.4 million in fiscal 2020.

We adopted ASU 2017-07 as of the beginning of our 2019 fiscal year on January 29, 2018.

Components of net periodic benefit cost other than the service cost for the SRIP, SERP and the Pension Plan are included in the line item “Other income, net” in our consolidated statements of operations.

Service cost is included in our consolidated statements of operations under “Selling and administrative expenses.” The adoption resulted in the reclassification of a $ 30,000 gain from Selling and administrative expenses to Other income, net in fiscal 2018 consolidated statements of operations.

Executive Benefits

Pension, SRIP and SERP Overview

SRIP and SERP Overview

We maintain two “frozen” retirement plans, which are paying benefits and may include active employees among the participants but we do not expect to add participants to these plans in the future.

The two plans include:

a supplemental retirement income plan (“SRIP”) for certain former and current executives of Hooker Furniture Corporation;

a supplemental retirement income plan (“SRIP”) for certain former and current executives of Hooker Furnishings Corporation;

the Pulaski Furniture Corporation Supplemental Executive Retirement Plan (“SERP”) for certain former executives.

In January 2019, we terminated the Pulaski Furniture Corporation Pension Plan (“Pension Plan”) settled all the obligations in fiscal 2020 which was also frozen and had been frozen since we acquired it in the Home Meridian acquisition.

SRIP and SERP

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Summarized SRIP and SERP information as of each fiscal year-end (the measurement date) is as follows:

SRIP (Supplemental Retirement Income Plan)

(Supplemental Retirement Income Plan)

Change in benefit obligation:

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Benefits paid

Actuarial loss

Actuarial (gain)/ loss

Ending projected benefit obligation (funded status)

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Non-current liabilities (Deferred compensation line)

Fifty-Two Weeks Ended

Net periodic benefit cost

2 unchanged sentences

Other changes recognized in accumulated other comprehensive income

Net loss arising during period

Net (gain) / loss arising during period

Amortizations:

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This rate was used to value the ending benefit obligations.

At January 30, 2022, the actuarial gain related to the SRIP amounted to $ 553 ,000, net of tax of $ 237 ,000.

At January 31, 2021, the actuarial losses related to the SRIP amounted to $ 530 ,000, net of tax of $ 338 ,000.

At February 2, 2020, the actuarial losses related to the SRIP amounted to $ 716 ,000, net of tax of $ 149 ,000.

The estimated actuarial loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the 2022 fiscal year is $ 401,622 .

The estimated actuarial gain that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the 2023 fiscal year is $ 83,310 .

There is no expected prior service (cost) or credit amortization.

SERP (Supplemental Executive

Retirement Plan)

(Supplemental Executive Retirement Plan)

Change in benefit obligation:

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Non-current liabilities (Deferred compensation line)

Fifty-Two Weeks Ended

Net periodic benefit cost

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Fiscal 2028 through fiscal 2032

For the SERP, the discount rate assumption used to measure the projected benefit obligations is set by reference to a certain hypothetical AA-rated corporate bond spot-rate yield curve constructed by our actuary, Aon (“Aon”).

This yield curve was constructed from the underlying bond price and yield data collected as of the Plan’s measurement date and is represented by a series of annualized, individual discount rates with durations ranging from six months to seventy-five years.

Aon then applies the spot rates of the yield curve to the actuarially projected cash flow patterns to derive the appropriate single effective discount rate.

At February 2, 2020, the plan used 2.60% based on rounding the Aon AA Above Median yield curve as of January 31, 2019.

This rate was used to determine the fiscal 2021 net periodic cost.

At January 31, 2021, combining the Aon AA Above Median yield curve and the plan's expected benefit payments created a rate of 2.10%.

This rate was used to value the ending benefit obligations.

At January 30, 2022, combining the Aon AA Above Median yield curve and the plan's expected benefit payments created a rate of 2.80%.

The change in the discount rate from 2.10% to 2.80% decreased liabilities.

At January 30, 2022, the actuarial gain related to the SERP was $ 39 ,000.

At February 2, 2020, the actuarial loss related to the SERP was $ 168 ,000.

The estimated net transition (asset)/obligation, prior service (cost) credit and actuarial loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost over fiscal 2020 are immaterial.

The Pension Plan

On January 30, 2019, our Board of Directors voted to terminate the Pension Plan.

We settled all Pension Plan obligations during the third quarter of fiscal 2020 with the purchase of nonparticipating annuity contracts for plan participants.

Summarized Pension Plan information as of February 2, 2020 is as follows:

Pulaski Furniture Pension Plan

Change in benefit obligation:

Beginning projected benefit obligation

Interest cost

Benefits paid

Actuarial loss

Ending projected benefit obligation

Change in Plan Assets:

Beginning fair value of plan assets

Actual return on plan assets

Employer contributions

Actual expenses paid

Actual benefits paid

Ending fair value of plan assets

Funded Status of the Plan

Discount rate used to value the ending benefit obligations:

Amount recognized in the consolidated balance sheets:

Current liabilities (Accrued salaries, wages and benefits line)

Non-current liabilities (Deferred compensation line)

Net Asset/(Liability)

Net periodic benefit cost

Expected administrative expenses

Interest cost

Net periodic benefit cost

Settlement/Curtailment Income

Total net periodic benefit cost (Income)

Other changes recognized in other comprehensive income

Net (gain) loss arising during period

Amortization:

Total recognized in other comprehensive (income) loss

Total recognized in net periodic benefit cost and

accumulated other comprehensive income

Assumptions used to determine net periodic benefit cost:

Discount rate

Increase in future compensation levels

At January 31, 2021, the actuarial gain related to the SERP was $ 67 ,000.

NOTE 13 – SHARE-BASED COMPENSATION

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Previous Awards (vested)

Restricted shares Issued on May 7, 2018

Restricted shares Issued on April 17, 2019

Partial vested due to separation

Restricted shares Issued on May 8, 2019

Restricted shares Issued on April 7, 2020

Restricted shares Issued on June 16, 2020

Restricted shares Issued on October 19, 2020

Restricted shares Issued on April 8, 2021

Restricted shares Issued on June 3, 2021

Awards outstanding at January 30, 2022:

6 unchanged sentences

The following table presents RSU activities for the year ended January 30, 2022:

Grant-Date Fair Value

Unrecognized At

1 unchanged sentence

Previous Awards (vested)

RSUs Awarded on June 4, 2018

RSUs Awarded on April 17, 2019

Partial vested due to separation

RSUs Awarded on April 7, 2020

Partial vested due to separation

RSUs Awarded on April 8, 2021

RSUs for retention Awarded on April 8, 2021

Awards outstanding at January 30, 2022:

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The payout or settlement of the PSUs will be made in shares of our common stock.

Grant-Date Fair Value

PSUs awarded in fiscal 2019 and fiscal 2020 were forfeited as the performance targets were not met.

The following table presents PSU activities for the year ended January 30, 2022:

Unrecognized At

January 30, 2022

PSUs Awarded on June 4, 2018

Previous Awards (vested)

PSUs Awarded on April 7, 2020

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The following table sets forth the computation of basic and diluted earnings per share:

Net (loss)/income

Fifty-Two Weeks Ended

Net income/(loss)

Dividends on unvested restricted shares

6 unchanged sentences

earnings per share

Basic (loss)/earnings per share

Diluted (loss)/earnings per share

Basic earnings/(loss) per share

Diluted earnings/(loss) per share

*Due to the fiscal 2021 net loss, approximately 119,000 shares would have been antidilutive and are therefore excluded from the calculation of earnings per share.

1 unchanged sentence

Our provision for income taxes was as follows for the periods indicated:

Fifty-Two Weeks Ended

Current expense

2 unchanged sentences

Total deferred taxes

Income tax (benefit)/expense

Income tax expense / (benefit)

Total tax expense for fiscal 2022 was $ 3.6 million, of which $ 3.4 million expense was allocated to continuing operations and $ 200 ,000 tax expense was allocated to other comprehensive income.

Total tax benefit for fiscal 2021 was $ 4.2 million, of which $ 4.1 million benefit was allocated to continuing operations and $ 30 ,000 tax benefit was allocated to other comprehensive income.

Total tax expense for fiscal 2020 was $ 4.5 million, of which $ 4.8 million expense was allocated to continuing operations and $ 300 ,000 tax benefit was allocated to other comprehensive income.

Total tax expense for fiscal 2019 was $ 11.6 million, of which $ 11.7 million expense was allocated to continuing operations and $ 73 ,000 tax benefit was allocated to other comprehensive income.

The effective income tax rate differed from the federal statutory tax rate as follows for the period s indicated:

Fifty-Two Weeks Ended

Income taxes at statutory rate

2 unchanged sentences

Officer's life insurance

Expiration of capital loss

Change in valuation allowance

Consolidated Appropriation Act provisions

5 unchanged sentences

Employee benefits

Capital loss carryover

Loss and credit carryover

Accrued liabilities

2 unchanged sentences

Valuation allowance

Intangible assets

Property, plant and equipment

1 unchanged sentence

Net deferred tax assets

At January 31, 2021 and February 2, 2020 our net deferred asset was $ 14.2 million and $ 2.9 million, respectively.

The increase in the valuation allowance of $ 18,000 was due to foreign tax credit limitations.

We expect to fully realize the benefit of the deferred tax assets, with the exception of the capital loss carry forward and foreign tax credit carry forward, in future periods when the amounts become deductible.

The capital loss carry forward is $ 1.4 million and expires in fiscal 2022.

At January 30, 2022 and January 31, 2021 our net deferred asset was $ 11.6 and $ 14.2 million, respectively.

The decrease in the valuation allowance of $ 323,000 was primarily due to the expiration of a capital loss carryforward.

We expect to fully realize the benefit of the deferred tax assets, with the exception of the foreign tax credit carry forward, in future periods when the amounts become deductible.

The foreign tax credit carry forward is $ 88,000 and expires beginning in fiscal 2029.

Current accounting standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The guidance also addresses de-recognition, classification, interest and penalties, accounting in interim periods and disclosures.

The guidance also addresses de-recognition, classification, interest and penalties, accounting in interim periods and disclosure.

We do not have unrecognized tax benefits as of January 30, 2022.

Tax years ending January 28, 2018 through January 31, 2021 remain subject to examination by federal and state taxing authorities.

Tax years ending February 3, 2019 through January 30, 2022 remain subject to examination by federal and state taxing authorities.

NOTE 16 – SEGMENT INFORMATION

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The Hooker Branded and Home Meridian segments were unchanged.

Therefore, for financial reporting purposes, we are organized into three reportable segments and “All Other”, which includes the remainder of our businesses:

(Fiscal 2020 results shown below have been recast based on the re-composition of our operating segments during the 2020 fourth quarter.) Therefore, for financial reporting purposes, we are organized into three reportable segments and “All Other”, which includes the remainder of our businesses:

Hooker Branded , consisting of the operations of our imported Hooker Casegoods and Hooker Upholstery businesses;

7 unchanged sentences

Fifty-Two Weeks Ended

Fifty-Three Weeks Ended

January 30, 2022

February 2, 2020

January 31, 2021

February 2, 2020

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$ 101,702 17.1 % $ 112,748 20.9 % $ 113,958 18.7 %

Operating (Loss)/Income

Operating Income/(Loss)

Hooker Branded

10 unchanged sentences

Home Meridian

4,829 347 496

Domestic Upholstery

10 unchanged sentences

As of January 30,

As of February 2,

As of January 31,

Hooker Branded

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Net Sales (in thousands)

No significant long-lived assets were held outside the United States at either January 31, 2021 or February 2, 2020.

International customers accounted for 2.0 % of consolidated invoiced sales in fiscal 2021, 1.6 % in fiscal 2020, and 1.2 % fiscal 2019.

No significant long-lived assets were held outside the United States at either January 30, 2022 or January 31, 2021.

International customers accounted for 2.0 % of consolidated invoiced sales in fiscal 2022 and 2021, and 1.6 % in fiscal 2020.

We define international sales as sales outside of the United States and Canada.

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Because of the large number and diverse nature of the foreign factories from which we can source our imported products, we have some flexibility in the placement of products in any particular factory or country.

Factories located in Vietnam and China are a critical resource for Hooker Furniture.

Factories located in Vietnam and China are a critical resource for Hooker Furnishings.

In fiscal 2022, imported products sourced from Vietnam and China accounted for 88 % of our import purchases and our top five suppliers in those countries accounted for 42 % of our fiscal 2022 import purchases.

A disruption in our supply chain from Vietnam or China could significantly impact our ability to fill customer orders for products manufactured at that factory or in that country.

A disruption in our supply chain from Vietnam, China or Malaysia could significantly impact our ability to fill customer orders for products manufactured at that factory or in that country.

Raw Materials Sourcing for Domestic Upholstery Manufacturing

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Concentration of Sales and Accounts Receivable

One customer accounted for nearly 12 % of our consolidated sales in fiscal 2021.

Our top five customers accounted for approximately 30% of our fiscal 2021 consolidated sales .

One customer accounted for 8 % of our consolidated sales in fiscal 2022.

Our top five customers accounted for 26% of our fiscal 2022 consolidated sales .

The loss of any one or more of these customers could adversely affect our earnings, financial condition and liquidity.

At January 31, 2021, half of our consolidated accounts receivable is concentrated in our top five customers.

NOTE 20 – CONSOLIDATED QUARTERLY DATA (Unaudited- see accompanying accountant ’ s report.)

Fiscal Quarter

Cost of sales

Selling and administrative expenses

Goodwill impairment charges

Trade name impairment charges

Basic (loss)/earnings per share

Diluted (loss)/earnings per share

Cost of sales

Selling and administrative expenses

Basic earnings per share

Diluted earnings per share

Earnings per share for each fiscal quarter is derived using the weighted average number of shares outstanding during that quarter.

Earnings per share for each fiscal year is derived using the weighted average number of shares outstanding on an annual basis.

Consequently, the sum of earnings per share for the quarters of a fiscal year may not equal earnings per share for the full fiscal year.

At January 30, 2022, 25% of our consolidated accounts receivable is concentrated in our top five customers.

NOTE 19- RELATED PARTY TRANSACTIONS

1 unchanged sentence

One of our employees has an ownership interest in the entities that own these properties.

The leases commenced on September 29, 2017 and an option to renew each for an additional seven years .

The leases commenced on September 29, 2017 with an option to renew each for an additional seven years .

All four leases include annual rent escalation clauses with respect to minimum lease payments after the initial 84 -month term of the lease is completed.

4 unchanged sentences

On March 1, 2022 , our Board of Directors declared a quarterly cash dividend of $ 0.20 per share, payable on March 31, 2022 to shareholders of record at March 17, 2022 .

Sunset West Acquisition

On January 31, 2022, the first day of our 2023 fiscal year, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Sunset HWM, LLC (“Sunset West”) and its three members (the “Sunset West Members”) to acquire substantially all of the assets of Sunset West (the “Sunset Acquisition”).

Simultaneously, we closed on the transaction by paying $ 23.5 million in cash and $ 2 million subject to an escrow arrangement and possible earn-out payments to the Sunset West Members up to an aggregate of $ 4 million with the closing cash consideration subject to adjustment for customary working capital estimates.

Under the Asset Purchase Agreement, the Company also assumed specified liabilities of Sunset West.

Sunset West is a leading West Coast-based manufacturer of outdoor furniture with its headquarters in Vista, California.

The transaction enables us to immediately gain market share in the growing outdoor furniture segment of the industry with one of the most respected brands in the category.

Fair Value Estimates of Assets Acquired and Liabilities Assumed

The consideration and components of our initial fair value allocation of the purchase price paid at closing and in the subsequent Net Working Capital Adjustment consisted of the following:

Purchase price consideration

Cash paid for assets acquired

Net working capital excess to working capital target

Total purchase price

Fair value estimates of assets acquired and liabilities assumed:

Net working capital

Intangible assets

Total purchase price

Substantially all of these amounts are subject to subsequent adjustment as we continue to gather information during the measurement period.

Certain intangible assets were acquired as part of this transaction.

Trademarks, trade names and customer relationships have been assigned preliminary fair values subject to additional analysis during the measurement period.

While we are still analyzing Sunset West’s operations and the requirements of ASC 280:

Segment Reporting , we anticipate Sunset West will be included in the Domestic Upholstery segment.

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-K

Item 9A. Controls and Procedures