Virginia
|
54-0251350
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
Large accelerated Filer ☐
|
Accelerated filer ☒
|
Non-accelerated Filer ☐ (Do not check if a smaller reporting company)
|
Smaller reporting company ☐
|
Common stock, no par value
|
11,556,316
|
(Class of common stock)
|
(Number of shares)
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
3
|
|
|
|
|
Item 2.
|
20
|
|
|
|
|
Item 3.
|
36
|
|
|
|
|
Item 4.
|
36
|
|
|
|
|
PART II. OTHER INFORMATION
|
|
|
|
|
|
Item 6.
|
38
|
|
|
|
|
39
|
As of
|
May 1,
|
January 31,
|
||||||
2016
|
2016
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
32,354
|
$
|
53,922
|
||||
Trade accounts receivable, less allowance for doubtful
accounts of $3,464 and $1,032 on each respective date
|
61,760
|
28,176
|
||||||
Inventories
|
77,670
|
43,713
|
||||||
Prepaid expenses and other current assets
|
3,694
|
2,256
|
||||||
Total current assets
|
175,478
|
128,067
|
||||||
Property, plant and equipment, net
|
28,192
|
22,768
|
||||||
Cash surrender value of life insurance policies (see notes 3 and 8)
|
22,246
|
21,888
|
||||||
Deferred taxes
|
6,633
|
5,350
|
||||||
Intangible assets (see notes 3 and 9)
|
27,528
|
1,382
|
||||||
Goodwill (see notes 3 and 9)
|
23,398
|
-
|
||||||
Other assets
|
2,190
|
2,198
|
||||||
Total non-current assets
|
110,187
|
53,586
|
||||||
Total assets
|
$
|
285,665
|
$
|
181,653
|
||||
Liabilities and Shareholders’ Equity
|
||||||||
Current liabilities
|
||||||||
Current portion of term loan
|
$
|
5,816
|
$
|
-
|
||||
Trade accounts payable
|
26,275
|
9,105
|
||||||
Accrued salaries, wages and benefits
|
4,771
|
4,834
|
||||||
Income tax accrual
|
733
|
357
|
||||||
Customer deposits
|
4,069
|
797
|
||||||
Other accrued expenses
|
2,435
|
1,512
|
||||||
Total current liabilities
|
44,099
|
16,605
|
||||||
Long term debt (see note 10)
|
46,234
|
-
|
||||||
Deferred compensation (see note 11)
|
10,619
|
8,409
|
||||||
Pension plan (see note 11)
|
4,967
|
-
|
||||||
Income tax accrual
|
168
|
166
|
||||||
Other long-term liabilities
|
1,416
|
412
|
||||||
Total long-term liabilities
|
63,404
|
8,987
|
||||||
Total liabilities
|
107,503
|
25,592
|
||||||
Shareholders’ equity
|
||||||||
Common stock, no par value, 20,000 shares authorized,
11,556 and 10,818 shares issued and outstanding on each date (see note 4)
|
39,434
|
18,667
|
||||||
Retained earnings
|
138,601
|
137,255
|
||||||
Accumulated other comprehensive income
|
127
|
139
|
||||||
Total shareholders’ equity
|
178,162
|
156,061
|
||||||
Total liabilities and shareholders’ equity
|
$
|
285,665
|
$
|
181,653
|
Thirteen Weeks Ended
|
||||||||
May 1,
|
May 3,
|
|||||||
2016
|
2015
|
|||||||
Net sales
|
$
|
121,831
|
$
|
60,956
|
||||
Cost of sales
|
95,232
|
44,581
|
||||||
Gross profit
|
26,599
|
16,375
|
||||||
Selling and administrative expenses
|
20,944
|
11,133
|
||||||
Intangible asset amortization (see notes 3 and 9)
|
1,654
|
-
|
||||||
Operating income
|
4,001
|
5,242
|
||||||
Other income, net
|
159
|
144
|
||||||
Interest expense, net
|
263
|
12
|
|
|||||
Income before income taxes
|
3,897
|
5,374
|
||||||
Income tax expense
|
1,397
|
1,902
|
||||||
Net income
|
$
|
2,500
|
$
|
3,472
|
||||
Earnings per share
|
||||||||
Basic
|
$
|
0.22
|
$
|
0.32
|
||||
Diluted
|
$
|
0.22
|
$
|
0.32
|
||||
Weighted average shares outstanding:
|
||||||||
Basic
|
11,515
|
10,756
|
||||||
Diluted
|
11,540
|
10,781
|
||||||
Cash dividends declared per share
|
$
|
0.10
|
$
|
0.10
|
|
For the
|
|||||||
Thirteen Weeks Ended
|
||||||||
May 1,
|
May 3,
|
|||||||
|
2016
|
2015
|
||||||
Net Income
|
$
|
2,500
|
$
|
3,472
|
||||
Other comprehensive (loss) income:
|
||||||||
Amortization of actuarial (gain) loss
|
(17
|
)
|
45
|
|||||
Income tax effect on amortization | 5 | (17 | ) | |||||
Adjustments to net periodic benefit cost
|
(12
|
)
|
28
|
|||||
Total comprehensive Income
|
$
|
2,488
|
$
|
3,500
|
Thirteen Weeks Ended
|
||||||||
May 1,
|
May 3,
|
|||||||
2016
|
2015
|
|||||||
Operating Activities:
|
||||||||
Net income
|
$
|
2,500
|
$
|
3,472
|
||||
Adjustments to reconcile net income to net cash
provided by operating activities:
|
||||||||
Depreciation and amortization
|
2,785
|
620
|
||||||
Loss/(Gain) on disposal of assets
|
(15
|
)
|
41
|
|||||
Deferred income tax (benefit) expense
|
(1,276
|
)
|
826
|
|||||
Noncash restricted stock and performance awards
|
629
|
157
|
||||||
Provision for doubtful accounts
|
16
|
698
|
||||||
Changes in assets and liabilities:
|
||||||||
Trade accounts receivable
|
13,553
|
1,224
|
||||||
Inventories
|
3,649
|
1,017
|
||||||
Income tax receivable
|
-
|
(178
|
)
|
|||||
Gain on life insurance policies
|
(181
|
)
|
(173
|
)
|
||||
Prepaid expenses and other current assets
|
335
|
193
|
||||||
Trade accounts payable
|
(5,615
|
)
|
(1,869
|
)
|
||||
Accrued salaries, wages, and benefits
|
(2,242
|
)
|
(1,494
|
)
|
||||
Accrued income taxes
|
376
|
(1,368
|
)
|
|||||
Customer deposits
|
651
|
58
|
||||||
Other accrued expenses
|
(639
|
)
|
154
|
|||||
Deferred compensation
|
(25
|
)
|
146
|
|||||
Other long-term liabilities
|
(40
|
)
|
15
|
|||||
Net cash provided by operating activities
|
$
|
14,461
|
$
|
3,539
|
||||
Investing Activities:
|
||||||||
Acquisition of Home Meridian
|
$
|
(86,062
|
)
|
$
|
-
|
|||
Purchases of property and equipment
|
(703
|
)
|
(428
|
)
|
||||
Proceeds received on notes for sale of assets
|
26
|
7
|
||||||
Premiums paid on life insurance policies
|
(174
|
)
|
(168
|
)
|
||||
Net cash used in investing activities
|
(86,913
|
)
|
(589
|
)
|
||||
Financing Activities:
|
||||||||
Proceeds from long-term debt
|
$
|
60,000
|
$
|
-
|
||||
Payments for long-term debt
|
(7,797
|
)
|
-
|
|||||
Debt issuance cost
|
(165
|
)
|
-
|
|||||
Cash dividends paid
|
(1,154
|
)
|
(1,079
|
)
|
||||
Net cash provided by (used in) financing activities
|
50,884
|
(1,079
|
)
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(21,568
|
)
|
1,871
|
|||||
Cash and cash equivalents - beginning of year
|
53,922
|
38,663
|
||||||
Cash and cash equivalents - end of quarter
|
$
|
32,354
|
$
|
40,534
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for income taxes
|
$
|
2,308
|
$
|
2,611
|
||||
Cash paid for interest, net
|
164
|
9
|
||||||
Non-cash transactions:
|
||||||||
Acquisition cost paid in common stock
|
$
|
20,267
|
$
|
-
|
||||
Increase in property and equipment through accrued purchases
|
44
|
-
|
1. | Preparation of Interim Financial Statements |
§
|
the 2017 fiscal year and comparable terminology mean the fiscal year that began February 1, 2016 and will end January 29, 2017; and
|
§
|
the 2016 fiscal year and comparable terminology mean the fiscal year that began February 2, 2015 and ended January 31, 2016.
|
Fair value estimates of assets acquired and liabilities assumed
|
||||
Purchase price consideration
|
||||
Cash paid for assets acquired, including working capital adjustment
|
$
|
86,062
|
||
Value of shares issued for assets acquired
|
15,000
|
|||
Value of shares issued for excess net working capital
|
5,267
|
|||
Total purchase price
|
$
|
106,329
|
||
Accounts receivable
|
$
|
46,210
|
||
Inventory
|
37,606
|
|||
Prepaid expenses and other current assets
|
1,776
|
|||
Property and equipment
|
5,801
|
|||
Intangible assets
|
27,800
|
|||
Goodwill
|
23,398
|
|||
Accounts payable
|
(22,681
|
)
|
||
Accrued expenses
|
(4,861
|
)
|
||
Pension plan liabilities and deferred compensation balances
|
(8,720
|
)
|
||
Total purchase price
|
$
|
106,329
|
§
|
Home Meridian tradenames of $11.6 million consisting of:
|
o
|
Indefinite-lived intangible assets with an aggregate fair value of $11.4 million. The tradenames are not subject to amortization, but will be evaluated annually and as circumstances dictate, for impairment; and
|
o
|
Definite-lived intangible assets with an aggregate fair value of $200,000, which we expect to amortize over an eight-year period.
|
§
|
Home Meridian customer relationships which are definite-lived intangible assets with an aggregate fair value of $14.4 million. The customer relationships are amortizable and will be amortized over a period of eleven years; and
|
§
|
Home Meridian order backlog which is a definite-lived intangible assets with an aggregate fair value of $1.8 million which we will amortize over five months, with most of the expense recognized in the fiscal 2017 first quarter.
|
13 Weeks Ended
|
||||||||
(in millions except per share data)
|
May 1, 2016
|
May 3, 2015
|
||||||
(Pro forma) | ||||||||
Net Sales
|
$
|
121,831
|
$
|
125,800
|
||||
Net Income
|
2,500
|
2,690
|
||||||
Basic EPS
|
$
|
0.22
|
$
|
0.23
|
||||
Diluted EPS
|
$
|
0.22
|
$
|
0.23
|
Common Stock
|
||||||||
Shares
|
Amount
|
|||||||
Oustanding shares January 31, 2016
|
10,818
|
$
|
18,667
|
|||||
Shares issued for Acquisition
|
717
|
20,267
|
||||||
Restricted share grants
|
21
|
413
|
||||||
Restricted stock compensation costs
|
-
|
87
|
||||||
Oustanding shares May 1, 2016
|
11,556
|
$
|
39,434
|
May 1,
|
January 31,
|
|||||||
2016
|
2016
|
|||||||
Trade accounts receivable
|
$
|
61,344
|
$
|
25,520
|
||||
Receivable from factor
|
3,880
|
3,688
|
||||||
Allowance for doubtful accounts
|
(3,464
|
)
|
(1,032
|
)
|
||||
Accounts receivable
|
$
|
61,760
|
$
|
28,176
|
6. | Inventories |
May 1,
|
January 31,
|
|||||||
2016
|
2016
|
|||||||
Finished furniture
|
$
|
88,881
|
$
|
55,120
|
||||
Furniture in process
|
960
|
727
|
||||||
Materials and supplies
|
8,181
|
7,994
|
||||||
Inventories at FIFO
|
98,022
|
63,841
|
||||||
Reduction to LIFO basis
|
(20,352
|
)
|
(20,128
|
)
|
||||
Inventories
|
$
|
77,670
|
$
|
43,713
|
Depreciable Lives
|
May 1,
|
Jan 31,
|
|||||||||
(In years)
|
2016
|
2016
|
|||||||||
Buildings and land improvements
|
15 - 30
|
$
|
22,946
|
$
|
22,777
|
||||||
Computer software and hardware
|
3 - 10
|
18,460
|
16,137
|
||||||||
Machinery and equipment
|
10
|
5,302
|
4,864
|
||||||||
Leasehold improvements
|
5
|
9,085
|
2,817
|
||||||||
Furniture and fixtures
|
3 - 8
|
2,274
|
1,453
|
||||||||
Other
|
5
|
555
|
546
|
||||||||
Total depreciable property at cost
|
58,622
|
48,594
|
|||||||||
Less accumulated depreciation
|
33,276
|
27,739
|
|||||||||
Total depreciable property, net
|
25,346
|
20,855
|
|||||||||
Land
|
1,067
|
1,067
|
|||||||||
Construction-in-progress
|
1,779
|
846
|
|||||||||
Property, plant and equipment, net
|
$
|
28,192
|
$
|
22,768
|
Fair value at May 1, 2016*
|
Fair value at January 31, 2016
|
|||||||||||||||||||||||||||||||
Description
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||
Assets measured at fair value
|
||||||||||||||||||||||||||||||||
Company-owned life insurance
|
$
|
-
|
$
|
22,246
|
$
|
-
|
$
|
22,246
|
$
|
-
|
$
|
21,888
|
$
|
-
|
$
|
21,888
|
||||||||||||||||
Mortgage note receivable
|
-
|
-
|
1,573
|
1,573
|
-
|
-
|
1,575
|
1,575
|
||||||||||||||||||||||||
Pension plan assets
|
11,585 | - | - | 11,585 | - | - | - | - |
May 1,
|
January 31,
|
|||||||||
Non-amortizable Intangible Assets
|
Segment |
2016
|
2016
|
|||||||
Goodwill
|
Home Meridian
|
$
|
23,398
|
$
|
-
|
|||||
Trademarks and trade names - Home Meridian
|
Home Meridian
|
11,400
|
-
|
|||||||
Trademarks and trade names - Bradington-Young
|
Upholstery
|
861
|
861
|
|||||||
Trademarks and trade names - Sam Moore
|
Upholstery
|
396
|
396
|
|||||||
URL- Homeware.com
|
All other
|
125
|
125
|
|||||||
Total non-amortizable assets
|
36,180
|
1,382
|
Amortizable Intangible Assets
|
||||||||||||||||
Customer
|
||||||||||||||||
Relationships
|
Backlog
|
Trademarks
|
Totals
|
|||||||||||||
Balance at January 31, 2016
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Intangibles- HMI acquisition
|
14,400
|
1,800
|
200
|
16,400
|
||||||||||||
Amortization
|
(327
|
)
|
(1,321
|
)
|
(6
|
)
|
(1,654
|
)
|
||||||||
Balance at May 1, 2016
|
$
|
14,073
|
$
|
479
|
$
|
194
|
$
|
14,746
|
Fiscal Year
|
Amount
|
|||
Remainder of 2017
|
$
|
1,480
|
||
2018
|
1,334
|
|||
2019
|
1,334
|
|||
2020
|
1,334
|
|||
2021
|
1,334
|
|||
Thereafter
|
7,930
|
|||
$
|
14,746
|
§
|
Unsecured revolving line of credit. The Loan Agreement increased the amount available under our existing unsecured revolving credit facility to $30 million and increased the sublimit of the facility available for the issuance of letters of credit to $4 million. Amounts outstanding under the revolving facility bear interest at a rate, adjusted monthly, equal to the then current LIBOR monthly rate plus 1.50%. We must also pay a quarterly unused commitment fee that is based on the average daily amount of the facility utilized during the applicable quarter;
|
§
|
Unsecured Term Loan. The Loan Agreement provided us with a $41 million unsecured term loan (the “Unsecured Term Loan”). Any amount borrowed under the Unsecured Term Loan will bear interest at a rate, adjusted monthly, equal to the then current LIBOR monthly rate plus 1.50%. We must repay any principal amount borrowed under Unsecured Term Loan in monthly installments of approximately $490,000, together with any accrued interest, until the full amount borrowed is repaid or until February 1, 2021, at which time all amounts outstanding under the Unsecured Term Loan will become due and payable; and
|
§
|
Secured Term Loan. The Loan Agreement provided us with a $19 million term loan (the “Secured Term Loan”) secured by a security interest in certain Company-owned life insurance policies granted to BofA under a security agreement, dated as of February 1, 2016 (the “Security Agreement”). Any amount borrowed under the Secured Term Loan will bear interest at a rate, adjusted monthly, equal to the then current LIBOR monthly rate plus 0.50%.We must pay the interest accrued on any principal amount borrowed under the Secured Term Loan on a monthly basis until the full principal amount borrowed is repaid or until February 1, 2021, at which time all amounts outstanding under the Secured Term Loan will become due and payable. BofA’s rights under the Security Agreement are enforceable upon the occurrence of an event of default under the Loan Agreement.
|
§
|
Maintain a tangible net worth of at least:
|
□
|
As of the fiscal year-end January 31, 2016, $105.0 million plus 40% of net income before taxes earned in the 2016 fiscal year; and
|
□
|
As of the end of each subsequent fiscal year, the minimum tangible net worth required for the prior fiscal year, plus 40% of net income, before taxes, earned in each subsequent fiscal year.
|
§
|
Maintain a ratio of funded debt to EBITDA not exceeding:
|
□
|
2.50:1.0 through August 31, 2017;
|
□
|
2.25:1.0 through August 31, 2018; and
|
□
|
2.00:1.00 thereafter.
|
§
|
A basic fixed charge coverage ratio of at least 1.25:1.00; and
|
§
|
Limit capital expenditures to no more than $15.0 million during any fiscal year with expenditures to acquire fixed assets pursuant to the Acquisition being excluded for the fiscal year in which the Acquisition occurs.
|
§
|
the Pulaski Furniture Corporation Supplemental Executive Retirement Plan (“SERP”) for certain former executives. The SERP is an unfunded plan and all benefits are paid solely out of our general assets; and
|
§
|
the Pulaski Furniture Corporation Pension Plan (“Pension Plan”) for former Pulaski Furniture Corporation employees.
|
|
May 1,
|
January 31,
|
||||||
|
2016
|
2016
|
||||||
Accrued salaries, wages and benefits (current portions)
|
||||||||
Hooker SRIP
|
$
|
354
|
$
|
354
|
||||
Home Meridian SERP
|
262
|
-
|
||||||
Home Meridian Pension
|
1,191
|
-
|
||||||
Total current portion
|
$
|
1,807
|
$
|
354
|
||||
|
||||||||
Long-term portions
|
||||||||
Hooker SRIP
|
$
|
7,895
|
$
|
7,799
|
||||
Home Meridian SERP
|
2,169
|
-
|
||||||
Total deferred compensation*
|
10,064
|
7,799
|
||||||
Home Meridian Pension Plan
|
4,967
|
-
|
||||||
Total deferred compensation and pension plans
|
15,031
|
$
|
7,799
|
|||||
|
||||||||
Consolidated pension liabilities
|
$
|
16,838
|
$
|
8,153
|
Thirteen Weeks Ended
|
||||||||
May 1,
|
May 3,
|
|||||||
2016
|
2015
|
|||||||
Net periodic benefit costs
|
||||||||
SRIP:
|
||||||||
Service cost
|
$
|
94
|
$
|
101
|
||||
Interest cost
|
85
|
72
|
||||||
Actuarial loss (gain)
|
(18
|
)
|
45
|
|||||
Total SRIP
|
161
|
218
|
||||||
SERP:
|
||||||||
Interest cost
|
22
|
-
|
||||||
Total SERP
|
22
|
-
|
||||||
Pension Plan:
|
||||||||
Interest cost
|
188
|
-
|
||||||
Expected return on pension plan assets
|
(197
|
)
|
||||||
Expected administrative expenses
|
70
|
-
|
||||||
Total Pension Plan
|
60
|
-
|
||||||
Consolidated net periodic benefit costs
|
$
|
244
|
$
|
218
|
May 1,
|
January 31,
|
|||||||
2016
|
2016
|
|||||||
Restricted shares
|
30
|
25
|
||||||
Restricted stock units
|
20
|
13
|
||||||
50
|
38
|
Thirteen Weeks Ended
|
||||||||
May 1,
|
May 3,
|
|||||||
2016
|
2015
|
|||||||
Net income
|
$
|
2,500
|
$
|
3,472
|
||||
Less: Unvested participating restricted stock dividends
|
3
|
3
|
||||||
Net earnings allocated to unvested participating restricted stock
|
6
|
9
|
||||||
Earnings available for common shareholders
|
2,491
|
3,460
|
||||||
Weighted average shares outstanding for basic earnings per share
|
11,515
|
10,756
|
||||||
Dilutive effect of unvested restricted stock and RSU awards
|
25
|
25
|
||||||
Weighted average shares outstanding for diluted earnings per share
|
11,540
|
10,781
|
||||||
Basic earnings per share
|
$
|
0.22
|
$
|
0.32
|
||||
Diluted earnings per share
|
$
|
0.22
|
$
|
0.32
|
Thirteen Weeks Ended
|
||||||||||||||||
May 1, 2016
|
May 3, 2015
|
|||||||||||||||
% Net Sales
|
% Net Sales
|
|||||||||||||||
Net Sales
|
||||||||||||||||
Hooker Casegoods
|
$
|
32,929
|
27.0
|
%
|
$
|
38,483
|
63.1
|
%
|
||||||||
Upholstery
|
21,893
|
18.0
|
%
|
21,303
|
34.9
|
%
|
||||||||||
Home Meridian
|
64,976
|
53.3
|
%
|
-
|
||||||||||||
All other
|
2,033
|
1.7
|
%
|
1,332
|
2.2
|
%
|
||||||||||
Intercompany eliminations
|
-
|
(162
|
)
|
|||||||||||||
Consolidated
|
$
|
121,831
|
100.0
|
%
|
$
|
60,956
|
100.0
|
%
|
||||||||
Gross Profit & Margin
|
||||||||||||||||
Hooker Casegoods
|
$
|
10,154
|
30.8
|
%
|
$
|
11,301
|
29.4
|
%
|
||||||||
Upholstery
|
5,076
|
23.2
|
%
|
4,718
|
22.1
|
%
|
||||||||||
Home Meridian
|
10,710
|
16.5
|
%
|
-
|
||||||||||||
All other
|
656
|
32.3
|
%
|
351
|
26.4
|
%
|
||||||||||
Intercompany eliminations
|
3
|
5
|
||||||||||||||
Consolidated
|
$
|
26,599
|
21.8
|
%
|
$
|
16,375
|
26.9
|
%
|
||||||||
Operating Income & Margin
|
||||||||||||||||
Hooker Casegoods
|
$
|
2,081
|
6.3
|
%
|
$
|
4,101
|
10.7
|
%
|
||||||||
Upholstery
|
1,763
|
8.1
|
%
|
1,447
|
6.8
|
%
|
||||||||||
Home Meridian
|
88
|
0.1
|
%
|
-
|
||||||||||||
All other
|
67
|
3.3
|
%
|
(311
|
)
|
-23.3
|
%
|
|||||||||
Intercompany eliminations
|
2
|
5
|
||||||||||||||
Consolidated
|
$
|
4,001
|
3.3
|
%
|
$
|
5,242
|
8.6
|
%
|
||||||||
Capital Expenditures
|
||||||||||||||||
Hooker Casegoods
|
$
|
380
|
$
|
369
|
||||||||||||
Upholstery
|
34
|
59
|
||||||||||||||
Home Meridian
|
289
|
-
|
||||||||||||||
All other
|
-
|
-
|
||||||||||||||
Consolidated
|
$
|
703
|
$
|
428
|
||||||||||||
Depreciation & Amortization
|
||||||||||||||||
Hooker Casegoods
|
$
|
536
|
$
|
397
|
||||||||||||
Upholstery
|
229
|
221
|
||||||||||||||
Home Meridian
|
2,018
|
|||||||||||||||
All other
|
2
|
2
|
||||||||||||||
Consolidated
|
$
|
2,785
|
$
|
620
|
||||||||||||
As of
May 1, 2016
|
% Total
|
As of
January 31, 2016
|
% Total
|
|||||||||||||
Total Assets
|
Assets
|
Assets
|
||||||||||||||
Hooker Casegoods
|
$
|
122,396
|
42.8
|
%
|
$
|
146,794
|
80.8
|
%
|
||||||||
Upholstery
|
34,561
|
12.2
|
%
|
34,010
|
18.7
|
%
|
||||||||||
Home Meridian
|
127,818
|
44.7
|
%
|
-
|
0.0
|
%
|
||||||||||
All other
|
902
|
0.3
|
%
|
863
|
0.5
|
%
|
||||||||||
Intercompany eliminations
|
(12
|
)
|
|
(14
|
)
|
|||||||||||
Consolidated
|
$
|
285,665
|
100.0
|
%
|
$
|
181,653
|
100.0
|
%
|
§
|
general economic or business conditions, both domestically and internationally, and instability in the financial and credit markets, including their potential impact on our (i) sales and operating costs and access to financing or (ii) customers and suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses;
|
§
|
the risks related to the recent acquisition of substantially all of the assets and certain liabilities of Home Meridian International, Inc., (“HMI”) including deal-related costs to be recognized in fiscal 2017, integration costs, costs related to acquisition debt, including maintaining HMI’s existing customer relationships, debt service costs, interest rate volatility, the use of operating cash flows to service debt to the detriment of other corporate initiatives or strategic opportunities, financial statement charges related to the application of current accounting guidance in accounting for the acquisition, the recognition of significant additional depreciation and amortization expenses by the combined entity, the loss of key employees from HMI, the ongoing costs related to the assumption of HMI’s pension liabilities, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies across the companies which could adversely affect our internal control or information systems and the costs of bringing them into compliance and failure to realize benefits anticipated from the acquisition;
|
§
|
the risks specifically related to the Home Meridian segment’s operations including significant concentrations of its sales and accounts receivable in only a few customers;
|
§
|
achieving and managing growth and change, and the risks associated with new business lines, acquisitions, restructurings, strategic alliances and international operations;
|
§
|
our ability to successfully implement our business plan to increase sales and improve financial performance;
|
§
|
changes in actuarial assumptions, the interest rate environment and the return on plan assets related to the Home Meridian segment’s legacy Pension Plan, which can affect future funding obligations, costs and plan liabilities;
|
§
|
the cost and difficulty of marketing and selling our products in foreign markets;
|
§
|
disruptions involving our vendors or the transportation and handling industries, particularly those affecting imported products from China and Vietnam, including customs issues, labor stoppages, strikes or slowdowns and the availability of shipping containers and cargo ships;
|
§
|
the interruption, inadequacy, security breaches or integration failure of our information systems or information technology infrastructure, related service providers or the internet;
|
§
|
disruptions affecting our Virginia, North Carolina or California warehouses, our Virginia or North Carolina corporate or divisional administrative facilities or our representative offices in China and Vietnam;
|
§
|
when or whether our new business initiatives, including, among others, H Contract and Homeware, meet growth and profitability targets;
|
§
|
price competition in the furniture industry;
|
§
|
changes in domestic and international monetary policies and fluctuations in foreign currency exchange rates affecting the price of our imported products and raw materials;
|
§
|
the cyclical nature of the furniture industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers’ income available for discretionary purchases, and the availability and terms of consumer credit;
|
§
|
risks associated with the cost of imported goods, including fluctuation in the prices of purchased finished goods and transportation and warehousing costs;
|
§
|
risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the prices and availability of key raw materials, as well as changes in transportation, warehousing and domestic labor costs and environmental compliance and remediation costs;
|
§
|
the direct and indirect costs associated with the implementation of our Enterprise Resource Planning system, including costs resulting from unanticipated disruptions to our business;
|
§
|
adverse political acts or developments in, or affecting, the international markets from which we import products, including duties or tariffs imposed on those products;
|
§
|
risks associated with distribution through third-party retailers, such as non-binding dealership arrangements;
|
§
|
capital requirements and costs;
|
§
|
competition from non-traditional outlets, such as catalog and internet retailers and home improvement centers;
|
§
|
changes in consumer preferences, including increased demand for lower-quality, lower-priced furniture due to, among other things, declines in consumer confidence, amounts of discretionary income available for furniture purchases and the availability of consumer credit;
|
§
|
higher than expected costs associated with product quality and safety, including regulatory compliance costs related to the sale of consumer products and costs related to defective or non-compliant products; and
|
§
|
higher than expected employee medical costs.
|
§
|
the 2017 fiscal year and comparable terminology mean the fiscal year that began February 1, 2016 and will end January 29, 2017; and
|
§
|
the 2016 fiscal year and comparable terminology mean the fiscal year that began February 2, 2015 and ended January 31, 2016.
|
§
|
Pulaski Furniture, specializing in casegoods covering the complete design spectrum: traditional, contemporary, and transitional in a wide range of bedroom, dining room, accent and display cabinets at medium price points,
|
§
|
Samuel Lawrence Furniture, specializing in value-conscious offerings in bedroom, dining room, home office and youth furnishings,
|
§
|
Prime Resources, value-conscious imported leather upholstered furniture,
|
§
|
Right2Home, a supplier to internet furniture retailers and
|
§
|
Samuel Lawrence Hospitality, a designer and supplier of hotel furnishings.
|
Hooker Furniture Corporation
|
||||||
Operating Segments
|
||||||
Hooker Casegoods
|
Upholstery
|
Home Meridian
|
All other
|
|||
Brands:
|
Brands:
|
Brands:
|
Brands:
|
|||
Hooker Furniture
|
Bradington-Young
|
Pulaski Furniture
|
H Contract
|
|||
Hooker Upholstery
|
Samuel Lawrence Furniture
|
Homeware
|
||||
Sam Moore
|
Samuel Lawrence Hospitality
|
|||||
Prime Resources
|
||||||
Right 2 Home
|
§
|
Gross profit. Consolidated gross profit increased primarily due to the acquisition of Home Meridian during the quarter and, to a lesser extent, improved gross profit in our Upholstery and All other operating segments due to increased sales in those segments. These increases were partially offset by decreased gross profit in our Hooker Casegoods segment due to decreased sales. However, as a percentage of net sales, gross margins in the Hooker Casegoods segment increased slightly due primarily to lower ocean freight costs.
|
§
|
Selling and administrative expenses. Consolidated selling and administrative (S&A) expenses increased in absolute terms, but decreased as a percentage of net sales primarily due to the addition of Home Meridian’s operations during the quarter. Hooker Casegoods segment S&A expenses increased in absolute terms and as a percentage of net sales despite that segment’s net sales decrease, primarily due to the inclusion of approximately $1.0 million of acquisition-related costs during the quarter.
|
§
|
Intangible asset amortization expense. The Home Meridian segment recorded $1.7 million of amortization expense for recently recorded acquisition-related intangibles.
|
§
|
Operating income. Consolidated operating income decreased $1.2 million primarily due to decreased Hooker Casegoods segment operating income which was partially offset by the addition of Home Meridian’s operations during the quarter and increased All other and Upholstery segment operating income, all due to the factors discussed above and in greater detail in the analysis below.
|
Thirteen Weeks Ended
|
||||||||
May 1,
|
May 3,
|
|||||||
2016
|
2015
|
|||||||
Net sales
|
100.0
|
%
|
100.0
|
%
|
||||
Cost of sales
|
78.2
|
73.1
|
||||||
Gross profit
|
21.8
|
26.9
|
||||||
Selling and administrative expenses
|
17.2
|
18.3
|
||||||
Intangible asset amortization
|
1.4
|
-
|
||||||
Operating income
|
3.3
|
8.6
|
||||||
Other income, net
|
0.1
|
0.2
|
||||||
Interest expense, net
|
0.2
|
-
|
||||||
Income before income taxes
|
3.2
|
8.8
|
||||||
Income tax expense
|
1.1
|
3.1
|
||||||
Net income
|
2.1
|
5.7
|
Net Sales
|
||||||||||||||||||||||||
Thirteen Weeks Ended
|
||||||||||||||||||||||||
May 1, 2016
|
May 3, 2015
|
$ Change
|
% Change
|
|||||||||||||||||||||
% Net Sales | % Net Sales | |||||||||||||||||||||||
Hooker Casegoods
|
$
|
32,929
|
27.0
|
%
|
$
|
38,483
|
63.1
|
%
|
$
|
(5,554
|
)
|
-14.4
|
%
|
|||||||||||
Upholstery
|
21,893
|
18.0
|
%
|
21,303
|
34.9
|
%
|
590
|
2.8
|
%
|
|||||||||||||||
All Other
|
2,033
|
1.7
|
%
|
1,332
|
2.2
|
%
|
701
|
52.6
|
%
|
|||||||||||||||
Intercompany Eliminations
|
-
|
(162
|
)
|
162
|
||||||||||||||||||||
Total excl. Home Meridian
|
56,855
|
46.7
|
%
|
60,956
|
100
|
%
|
(4,101
|
)
|
-6.7
|
%
|
||||||||||||||
Home Meridian
|
64,976
|
53.3
|
%
|
-
|
0.0
|
%
|
64,976
|
|||||||||||||||||
Consolidated
|
121,831
|
100
|
%
|
60,956
|
100
|
%
|
60,875
|
99.9
|
%
|
|||||||||||||||
Unit Volume
|
FY17 Q1 %
Increase
vs. FY16 Q1
|
Average Selling Price
|
FY17 Q1 %
Increase
vs. FY16 Q1
|
|||||||
Hooker Casegoods
|
-16.3
|
%
|
Hooker Casegoods
|
3.0
|
%
|
|||||
Upholstery
|
-0.6
|
%
|
Upholstery
|
3.9
|
%
|
|||||
All Other
|
12.0
|
%
|
All Other
|
32.2
|
%
|
|||||
Total excl. Home Meridian
|
-10.8
|
%
|
Total exclu. Home Meridian
|
4.9
|
%
|
|||||
Home Meridian
|
-
|
Home Meridian
|
-
|
|||||||
Consolidated
|
-10.8
|
%
|
Consolidated
|
4.9
|
%
|
Gross Income and Margin
|
||||||||||||||||||||||||
Thirteen Weeks Ended
|
||||||||||||||||||||||||
May 1, 2016
|
May 3, 2015
|
$ Change
|
% Change
|
|||||||||||||||||||||
% Net Sales | % Net Sales | |||||||||||||||||||||||
Hooker Casegoods
|
$
|
10,154
|
30.8
|
%
|
$
|
11,301
|
29.4
|
%
|
$
|
(1,147
|
)
|
-10.1
|
%
|
|||||||||||
Upholstery
|
5,076
|
23.2
|
%
|
4,718
|
22.1
|
%
|
358
|
7.6
|
%
|
|||||||||||||||
All Other
|
656
|
32.3
|
%
|
351
|
26.4
|
%
|
305
|
86.9
|
%
|
|||||||||||||||
Intercompany Eliminations
|
3
|
5
|
(2
|
)
|
||||||||||||||||||||
Total excl. Home Meridian
|
15,889
|
27.9
|
%
|
16,375
|
26.9
|
%
|
(486
|
)
|
-3.0
|
%
|
||||||||||||||
Home Meridian
|
10,710
|
16.5
|
%
|
-
|
$
|
10,710
|
||||||||||||||||||
Consolidated
|
$
|
26,599
|
21.8
|
%
|
$
|
16,375
|
26.9
|
%
|
$
|
10,224
|
62.4
|
%
|
§
|
the acquisition of Home Meridian on the first day of the fiscal 2017 first quarter;
|
§
|
improved upholstery segment gross profit due to increased sales and operating efficiencies; and
|
§
|
improved All other segment gross profit due to increased sales at H Contract.
|
Selling and Administrative Expenses
|
||||||||||||||||||||||||
Thirteen Weeks Ended
|
||||||||||||||||||||||||
May 1, 2016
|
May 3, 2015
|
$ Change
|
% Change
|
|||||||||||||||||||||
% Net Sales | % Net Sales | |||||||||||||||||||||||
Hooker Casegoods
|
$
|
8,073
|
24.5
|
%
|
$
|
7,200
|
18.7
|
%
|
$
|
873
|
12.1
|
%
|
||||||||||||
Upholstery
|
3,313
|
15.1
|
%
|
3,271
|
15.4
|
%
|
42
|
1.3
|
%
|
|||||||||||||||
All Other
|
590
|
29.0
|
%
|
662
|
49.7
|
%
|
(72
|
)
|
-10.9
|
%
|
||||||||||||||
Total excl. Home Meridian
|
11,976
|
21.1
|
%
|
11,133
|
18.3
|
%
|
843
|
7.6
|
%
|
|||||||||||||||
Home Meridian
|
8,968
|
13.8
|
%
|
-
|
8,968
|
|||||||||||||||||||
Consolidated
|
$
|
20,944
|
17.2
|
%
|
$
|
11,133
|
18.3
|
%
|
$
|
9,811
|
88.1
|
%
|
Intangible Asset Amortization
|
||||||||||||||||||||||||
Thirteen Weeks Ended
|
||||||||||||||||||||||||
May 1, 2016
|
May 3, 2015
|
$ Change
|
% Change
|
|||||||||||||||||||||
% Net Sales | % Net Sales | |||||||||||||||||||||||
Home Meridian
|
|
|
||||||||||||||||||||||
Intangible asset amortization
|
$
|
1,654
|
1.4
|
%
|
$
|
-
|
0.0
|
%
|
$
|
1,654
|
|
|
Operating Profit and Margin
|
||||||||||||||||||||||||
Thirteen Weeks Ended
|
||||||||||||||||||||||||
May 1, 2016
|
May 3, 2015
|
$ Change
|
% Change
|
|||||||||||||||||||||
% Net Sales | % Net Sales | |||||||||||||||||||||||
Hooker Casegoods
|
$
|
2,081
|
6.3
|
%
|
$
|
4,101
|
10.7
|
%
|
$
|
(2,020
|
)
|
-49.3
|
%
|
|||||||||||
Upholstery
|
1,763
|
8.1
|
%
|
1,447
|
6.8
|
%
|
316
|
21.8
|
%
|
|||||||||||||||
All Other
|
67
|
3.3
|
%
|
(311
|
)
|
-23.3
|
%
|
378
|
-121.5
|
%
|
||||||||||||||
Intercompany Eliminations
|
2
|
5
|
(3
|
)
|
||||||||||||||||||||
Total excl. Home Meridian
|
3,913
|
6.9
|
%
|
5,242
|
8.6
|
%
|
(1,329
|
)
|
-25.4
|
%
|
||||||||||||||
Home Meridian
|
88
|
0.1
|
%
|
-
|
88
|
|||||||||||||||||||
Consolidated
|
$
|
4,001
|
3.3
|
%
|
$
|
5,242
|
8.6
|
%
|
$
|
(1,241
|
)
|
-23.7
|
%
|
Interest Expense, net
|
||||||||||||||||||||||||
Thirteen Weeks Ended
|
||||||||||||||||||||||||
May 1, 2016
|
May 3, 2015
|
$ Change
|
% Change
|
|||||||||||||||||||||
% Net Sales
|
% Net Sales
|
|||||||||||||||||||||||
Consolidated interest expense (income), net
|
$
|
263
|
0.2
|
%
|
$
|
12
|
|
0.0
|
%
|
$
|
251
|
|
|
Income taxes
|
||||||||||||||||||||||||
Thirteen Weeks Ended
|
||||||||||||||||||||||||
May 1, 2016
|
May 3, 2015
|
$ Change
|
% Change
|
|||||||||||||||||||||
% Net Sales | % Net Sales | |||||||||||||||||||||||
Consolidated income tax expense
|
$
|
1,397
|
1.1
|
%
|
$
|
1,902
|
3.1
|
%
|
$
|
(505
|
)
|
-26.6
|
%
|
|||||||||||
Effective Tax Rate
|
35.8
|
%
|
35.4
|
%
|
Net Income
|
||||||||||||||||||||||||
Thirteen Weeks Ended
|
||||||||||||||||||||||||
May 1, 2016
|
May 3, 2015
|
$ Change
|
% Change
|
|||||||||||||||||||||
% Net Sales | % Net Sales | |||||||||||||||||||||||
Net Income | ||||||||||||||||||||||||
Consolidated
|
$
|
2,500
|
2.1
|
%
|
$
|
3,472
|
5.7
|
%
|
$
|
(972
|
)
|
-28.0
|
%
|
|||||||||||
Earnings per share
|
$
|
0.22
|
$
|
0.32
|
§
|
controlling costs;
|
§
|
evaluating ways to expand into new distribution channels;
|
§
|
successfully integrating the Home Meridian division;
|
§
|
leveraging best practices in order to lower costs, improve operational efficiencies and grow sales;
|
§
|
growing and improving the profitability of our new business initiatives;
|
§
|
building on our initial successes in expanding our merchandising reach in the “better” parts of our “good-better-best” casegoods product offerings;
|
§
|
growing sales of our Cynthia Rowley home furnishings collection;
|
§
|
improving the product assortment and value proposition of the Hooker Upholstery imported products line;
|
§
|
increasing production capacity at Sam Moore;
|
§
|
mitigating inflation on our imported products and raw materials;
|
§
|
maintaining proper inventory levels and optimizing product availability on best-selling items;
|
§
|
strengthening our relationships with key vendors and sourcing product from cost-competitive locations and from quality-conscious sourcing partners;
|
§
|
offering an array of new products and designs, which we believe will help generate additional sales; and
|
§
|
upgrading and refining our information systems capabilities to support our businesses, including implementing an ERP system at Bradington-Young.
|
Thirteen Weeks Ended
|
||||||||
May 1,
|
May 3,
|
|||||||
2016
|
2015
|
|||||||
Net cash provided by operating activities
|
$
|
14,461
|
$
|
3,539
|
||||
Net cash used in investing activities
|
(86,913
|
)
|
(589
|
)
|
||||
Net cash provided by (used in) financing activities
|
50,884
|
(1,079
|
)
|
|||||
Net (decrease) increase in cash and cash equivalents
|
$
|
(21,568
|
)
|
$
|
1,871
|
§
|
available cash and cash equivalents, which are highly dependent on incoming order rates and our operating performance;
|
§
|
expected cash flow from operations; and
|
§
|
available lines of credit.
|
§
|
capital expenditures;
|
§
|
working capital, including capital required to fund Home Meridian’s operations, capital required for insourcing our Bradington-Young trade receivables in fiscal 2017 and for our new business initiatives;
|
§
|
the payment of regular quarterly cash dividends on our common stock; and
|
§
|
the servicing of debt related to our acquisition of Home Meridian.
|
§
|
Unsecured revolving line of credit. The Loan Agreement increased the amount available under our existing unsecured revolving credit facility to $30 million and increased the sublimit of the facility available for the issuance of letters of credit to $4 million. Amounts outstanding under the revolving facility bear interest at a rate, adjusted monthly, equal to the then current LIBOR monthly rate plus 1.50%. We must also pay a quarterly unused commitment fee that is based on the average daily amount of the facility utilized during the applicable quarter;
|
§
|
Unsecured Term Loan. The Loan Agreement provided us with a $41 million Unsecured Term Loan. Any amount borrowed under the Unsecured Term Loan will bear interest at a rate, adjusted monthly, equal to the then current LIBOR monthly rate plus 1.50%. We must repay any principal amount borrowed under Unsecured Term Loan in monthly installments of approximately $490,000, together with any accrued interest, until the full amount borrowed is repaid or until February 1, 2021, at which time all amounts outstanding under the Unsecured Term Loan will become due and payable; and
|
§
|
Secured Term Loan. The Loan Agreement provided us with a $19 million term loan secured by a security interest in certain Company-owned life insurance policies granted to BofA under a security agreement, dated as of February 1, 2016 (the “Security Agreement”). Any amount borrowed under the Secured Term Loan will bear interest at a rate, adjusted monthly, equal to the then current LIBOR monthly rate plus 0.50%.We must pay the interest accrued on any principal amount borrowed under the Secured Term Loan on a monthly basis until the full principal amount borrowed is repaid or until February 1, 2021, at which time all amounts outstanding under the Secured Term Loan will become due and payable. BofA’s rights under the Security Agreement are enforceable upon the occurrence of an event of default under the Loan Agreement.
|
§
|
Maintain a tangible net worth of at least:
|
□
|
As of the fiscal year-end January 31, 2016, $105.0 million plus 40% of net income before taxes earned in the 2016 fiscal year; and
|
□
|
As of the end of each subsequent fiscal year, the minimum tangible net worth required for the prior fiscal year, plus 40% of net income, before taxes, earned in each subsequent fiscal year.
|
§
|
Maintain a ratio of funded debt to EBITDA not exceeding:
|
□
|
2.50:1.0 through August 31, 2017;
|
□
|
2.25:1.0 through August 31, 2018;
|
□
|
2.00:1.00 thereafter.
|
§
|
A basic fixed charge coverage ratio of at least 1.25:1.00; and
|
§
|
Limit capital expenditures to no more than $15.0 million during any fiscal year with expenditures to acquire fixed assets pursuant to the Acquisition being excluded for the fiscal year in which the Acquisition occurs.
|
§
|
allowed us to outsource the administrative burden of the credit and collections functions for our domestic upholstery operations;
|
§
|
allowed us to transfer the collection risk associated with the majority of our domestic upholstery receivables to the factor; and
|
§
|
provided us with an additional, potential source of short-term liquidity.
|
|
Estimated Additional Cash Payments Due by Period (In thousands)
|
|||||||||||||||||||
|
Less than
|
More than
|
||||||||||||||||||
|
1 Year
|
1-3 Years
|
3-5 Years
|
5 years
|
Total
|
|||||||||||||||
|
||||||||||||||||||||
Long-Term Debt Obligations (1)
|
$
|
5,857
|
$
|
11,714
|
$
|
34,632
|
$
|
-
|
$
|
52,203
|
||||||||||
Operating leases (2)
|
3,426
|
6,668
|
4,558
|
773
|
15,425
|
|||||||||||||||
Deferred compensation payments (3)
|
221
|
430
|
404
|
2,349
|
3,404
|
|||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Total contractual cash obligations
|
$
|
9,504
|
$
|
18,812
|
$
|
39,594
|
$
|
3,122
|
$
|
71,032
|
(1)
|
These amounts represent contractual cash payments due under our acquisition-related term loans. See note 10 “Debt” for additional information on our long-term debt. The current and non-current portions of long-term debt shown on our condensed consolidated balance sheets are shown net of unamortized loans costs in accordance with current accounting guidance. Consequently, the amounts shown in this table differ from the amounts shown on our condensed consolidated balance sheets.
|
(2)
|
These amounts represent estimated cash payments due under operating leases for real estate utilized in Home Meridian’s operations and warehouse and office equipment.
|
(3)
|
These amounts represent estimated cash payments to be paid to participants of Home Meridian’s legacy supplemental executive retirement plan or “SERP”. Additionally, we expect to contribute approximately $450,000 to Home Meridian’s legacy pension plan during the remainder of fiscal 2017. See note 11 “Employee Benefit Plans” for additional information about the SERP. Pension and our other retirement plan obligations.
|
3.1
|
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)
|
|
3.2
|
Amended and Restated Bylaws of the Company, as amended December 10, 2013 (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K (SEC File No. 000-25349) for the year ended February 2, 2014)
|
|
4.1
|
Amended and Restated Articles of Incorporation of the Company, as amended (See Exhibit 3.1)
|
|
4.2
|
Amended and Restated Bylaws of the Company, as amended (See Exhibit 3.2)
|
|
31.1*
|
||
31.2*
|
||
32.1**
|
||
101*
|
The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended May 1, 2016, formatted in Extensible Business Reporting Language (“XBRL”): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of income, (iii) condensed consolidated statements of comprehensive income, (iv) condensed consolidated statements of cash flows, and (v) the notes to the condensed consolidated financial statements
|
Date: June 10, 2016 |
By: /s/Paul A. Huckfeldt
Paul A. Huckfeldt
Chief Financial Officer and
Senior Vice President – Finance and
Accounting
|
Date: June 10, 2016 |
By: /s/ Paul B. Toms, Jr.
Paul B. Toms, Jr.
Chairman and Chief Executive Officer
|
a.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
b.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
May. 01, 2016 |
Jun. 03, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Hooker Furniture Corp | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --01-29 | |
Entity Common Stock, Shares Outstanding | 11,556,316 | |
Amendment Flag | false | |
Entity Central Index Key | 0001077688 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Accelerated Filer | |
Entity Well-known Seasoned Issuer | No | |
Document Period End Date | May 01, 2016 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
Allowance for doubtful accounts (in Dollars) | $ 3,464 | $ 1,032 |
Common stock, shares authorized | 20,000 | 20,000 |
Common stock, shares issued | 11,556 | 10,818 |
Common stock, shares outstanding | 11,556 | 10,818 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
May. 01, 2016 |
May. 03, 2015 |
|
Net sales | $ 121,831 | $ 60,956 |
Cost of sales | 95,232 | 44,581 |
Gross profit | 26,599 | 16,375 |
Selling and administrative expenses | 20,944 | 11,133 |
Intangible asset amortization (see notes 3 and 9) | 1,654 | 0 |
Operating income | 4,001 | 5,242 |
Other income, net | 159 | 144 |
Interest expense, net | 263 | 12 |
Income before income taxes | 3,897 | 5,374 |
Income tax expense | 1,397 | 1,902 |
Net income | $ 2,500 | $ 3,472 |
Earnings per share | ||
Basic (in Dollars per share) | $ 0.22 | $ 0.32 |
Diluted (in Dollars per share) | $ 0.22 | $ 0.32 |
Weighted average shares outstanding: | ||
Basic (in Shares) | 11,515 | 10,756 |
Diluted (in Shares) | 11,540 | 10,781 |
Cash dividends declared per share (in Dollars per share) | $ 0.10 | $ 0.10 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May. 01, 2016 |
May. 03, 2015 |
|
Net Income | $ 2,500 | $ 3,472 |
Other comprehensive (loss) income: | ||
Amortization of actuarial (gain) loss | (17) | 45 |
Income tax effect on amortization | 5 | (17) |
Adjustments to net periodic benefit cost | (12) | 28 |
Total comprehensive Income | $ 2,488 | $ 3,500 |
1. Preparation of Interim Financial Statements |
3 Months Ended | ||
---|---|---|---|
May. 01, 2016 | |||
Disclosure Text Block [Abstract] | |||
Business Description and Basis of Presentation [Text Block] |
The condensed consolidated financial statements of Hooker Furniture Corporation and subsidiaries (referred to as “we,” “us,” “our,” “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 statement 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 U.S. generally accepted accounting principles (“GAAP”) are condensed or omitted pursuant to SEC rules and regulations. However, we believe that the disclosures made are adequate for a fair presentation of our results of operations and financial position. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended January 31, 2016 (“2016 Annual Report”). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect both the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from our estimates. Operating results for the interim periods reported herein may not be indicative of the results expected for the fiscal year.
References in this document to “HMI” refer to Home Meridian International, the counter-party to the asset purchase agreement we entered into on January 6, 2016. References in this document to “Home Meridian” or “Home Meridian segment” refer to the newly acquired business operations and operating segment that was created upon the closing of the asset purchase agreement on February 1, 2016.
On February 1, 2016, we acquired substantially all of the assets and assumed certain liabilities of Home Meridian International, Inc. (“HMI”) for $86 million in cash and the issuance of 716,910 of our common stock valued at $20.3 million (such numbers include agreed upon post-closing working capital adjustments). Based on the way we manage, evaluate and internally report our operations, we determined that Home Meridian’s newly acquired operations will be reported as a separate operating segment. See notes 3 and 13 for additional details on the acquisition and our operating segments. The results of operations of Home Meridian are included in our results of operations beginning on February 1, 2016, the first day of our 2017 fiscal year. Conversely, since the acquisition was completed on the first day of the current fiscal year, comparable prior-year information for the Home Meridian segment is not included in the financial statements presented in this report. The acquisition is discussed in greater detail below in Note 3 Acquisition.
We adopted Accounting Standard’s Update (“ASU”) No. 2015-03,
"Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" in the first quarter of fiscal 2017. Prior to the issuance of this standard, debt issuance costs were required to be recorded as assets on the balance sheet. This update requires that debt issuance costs related to a debt liability be presented on the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. This update does not change the recognition and measurement of debt issuance costs. Prior to the recent Home Meridian acquisition, we had no outstanding debt. Consequently, there are no costs to reclassify as a result of the adoption of this standard. However, we capitalized debt issuance costs related to the recent acquisition of the Home Meridian business during the fiscal 2017 first quarter and those unamortized costs are netted against our outstanding debt on our condensed consolidated balance sheets.
We adopted ASU No. 2015-16,
"Business Combinations (Topic 805) Simplifying the Accounting for Measurement Period Adjustments", in the first quarter of fiscal 2017. This update requires that an acquirer in a business combination recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The effect on earnings of any changes in the provisional amounts must be calculated as if they occurred as of the acquisition date. The update also requires the acquirer to disclose the portion of the effect on earnings that would have been recorded in previous reporting periods if the adjustments to the provisional amounts had been recognized as of the acquisition date. This update must be adopted prospectively and may be early adopted for financial statements that had not been issued before the update's issuance date. The adoption of the update did not have a material effect on our Condensed Consolidated Income Statements in the fiscal 2017 first quarter but may in future quarters as management’s estimates and appraisals related to the Home Meridian acquisition are finalized.
|
2. Fiscal Periods |
3 Months Ended | ||||
---|---|---|---|---|---|
May. 01, 2016 | |||||
Disclosure Text Block [Abstract] | |||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
2.
Fiscal Periods
The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “first quarter” or “quarterly period”) that began February 1, 2016 and ended May 1, 2016. These financial statements also include the thirteen-week period that began February 2, 2015 and ended May 3, 2015.
References in these notes to the condensed consolidated financial statements of the Company to:
|
3. Acquisition |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure [Text Block] |
3.
Acquisition
On February 1, 2016, we completed the previously announced acquisition (the “Acquisition”) of substantially all of the assets of Home Meridian International, Inc. (“HMI”) pursuant to the Asset Purchase Agreement into which we and HMI entered on January 5, 2016 (the “Asset Purchase Agreement”). Upon completion and including post-closing working capital adjustments, we paid $86 million in cash and issued 716,910 shares of our common stock (the “Stock Consideration”) to designees of HMI as consideration for the Acquisition. The Stock Consideration consisted of (i) 530,598 shares due to the $15 million of consideration payable in shares of our common stock under the Asset Purchase Agreement, and (ii) 186,312 shares issued pursuant to working capital adjustments detailed in the Asset Purchase Agreement. The working capital adjustment was driven by an increase in HMI’s accounts receivable due to strong sales towards the end of calendar 2015. The number of shares of common stock issued at closing for the Stock Consideration was determined by reference to the mean closing price of our common stock for the fifteen trading days immediately preceding the closing date ($28.27). Under the Asset Purchase Agreement, we also assumed certain liabilities of HMI, including approximately $7.8 million of liabilities related to certain retirement plans. The assumed liabilities did not include the indebtedness (as defined in the Asset Purchase Agreement) of HMI.
Also on February 1, 2016, we entered into an amended and restated loan agreement (the “Loan Agreement”) with Bank of America, N.A. (“BofA”) in connection with the completion of the Acquisition. The Loan Agreement increases the amount available under our existing unsecured revolving credit facility to $30 million and increases the sublimit of such facility available for the issuance of letters of credit to $4 million. The Loan Agreement also provided us with a $41 million unsecured term loan (the “Unsecured Term Loan”) and a $19 million term loan (the “Secured Term Loan”) secured by a security interest in certain Company-owned life insurance policies granted to BofA under a security agreement, dated as of February 1, 2016 (the “Security Agreement”). On February 1, 2016, we borrowed in full the amounts available under the Unsecured Term Loan and the Secured Term Loan in connection with the completion of the Acquisition. For additional details regarding the Loan Agreement, see Note 9 Long Term Debt, below.
In accordance with FASB Accounting Standards Codification 805,
Business Combinations, the Acquisition has been accounted for using the acquisition method of accounting. We recorded assets acquired, including identifiable intangible assets, and liabilities assumed, from HMI at their respective fair values at the date of completion of the Acquisition. Any excess of the purchase price over the net fair value of such assets and liabilities will be recorded as goodwill.
The following table summarizes the preliminary estimates of the fair values of the identifiable assets acquired and liabilities assumed in the Acquisition as of May 1, 2016. The preliminary estimates of fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in adjustments to the preliminary values presented below, when management’s appraisals and estimates are finalized.
Property and equipment were recorded at fair value and primarily consist of leasehold improvements and will be amortized over their estimated useful lives.
Goodwill is calculated as the excess of the purchase price over the net assets acquired. The goodwill recognized is attributable to growth opportunities and expected synergies. All but $1.5 million in goodwill will be deductible for income tax purposes.
Intangible assets, net, consist of three separately identified assets:
The allocation of the purchase price to intangible assets, as well as their estimated useful lives, is preliminary and may be adjusted.
We also assumed the net liability for Home Meridian’s legacy pension plans of $8.7 million, which was based on an actuarial valuation performed on February 2, 2016. The market value of pension plan assets, primarily consisting of mutual funds, was $11.6 million on February 2, 2016. Components of net periodic benefit cost for these plans are based on annual actuarial valuations and are included in our condensed consolidated statements of income under selling and administrative expenses.
The following unaudited consolidated pro forma summary has been prepared by adjusting our historical data to give effect to the Acquisition as if it had occurred on February 1, 2015:
The unaudited consolidated pro forma financial information was prepared in accordance with existing standards and is not necessarily indicative of the results of operations that would have occurred if the Acquisition had been completed on the date indicated, nor is it indicative of our future operating results.
Material non-recurring adjustments excluded from the pro forma financial information in the table above consist of amortization of intangible assets, elimination of transaction related costs and an adjustment of the interest rate on short and long term debt to reflect the interest rates in the Company’s amended credit facility.
The unaudited pro forma results do not reflect events that either have occurred or may occur after the Acquisition, including, but not limited to, the anticipated realization of savings from operating synergies in subsequent periods. They also do not give effect to certain charges that we expect to incur in connection with the Acquisition, including, but not limited to, additional professional fees, employee integration, retention, potential asset impairments and accelerated depreciation and amortization.
We have incurred approximately $1.0 million in Acquisition related costs so far in fiscal 2017 and expect to incur an additional $400,000 during the remainder of fiscal 2017. These expenses are included in the “Selling and administrative expenses” line of our condensed consolidated statements of income.
|
4. Shareholders' Equity |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stockholders' Equity Note Disclosure [Text Block] |
4.
Shareholders’ Equity
The number of shares and the amount of common stock outstanding changed materially from the end of the 2016 fiscal year, as a result of issuing 716,910 shares of common stock to the designees of HMI as partial consideration for the Acquisition. The table below reconciles the number of shares and amounts of common stock outstanding from our most recent fiscal year end to the end of the fiscal 2017 first quarter. The table shows the effects of the Acquisition issuance, as well as other activity in the common stock account unrelated to the Acquisition.
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5. Accounts Receivable |
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Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
5.
Accounts Receivable
“Receivable from factor” represents amounts due with respect to factored accounts receivable. Under our current factoring agreement, which continues to serve Bradington-Young (BY), invoices for domestically produced BY upholstery products are generated and transmitted to our customers, with copies to the factor on a daily basis, as products are shipped to our customers. The factor collects the amounts due and remits collected funds to us semi-weekly, less factoring fees. We retain ownership of the accounts receivable until the invoices are 90 days past due. At that time, the factor pays us the net invoice amount, less factoring fees, and takes ownership of the accounts receivable. The factor is then entitled to collect the invoices on its own behalf and retain any subsequent remittances. The invoiced amounts are reported as accounts receivable on our condensed consolidated balance sheets, generally from the date the merchandise is shipped to our customer until payment is received from the factor.
A limited number of our accounts receivable for our domestically produced upholstery are factored with recourse to us. The amounts of these receivables at May 1, 2016 and January 31, 2016 were $275,000 and $255,000
, respectively. If the factor is unable to collect the amounts due, invoices are returned to us for collection. We include an estimate of potentially uncollectible receivables in our calculation of our allowance for doubtful accounts.
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6. Inventories |
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7. Property, Plant and Equipment |
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Property, Plant and Equipment Disclosure [Text Block] |
7.
Property, Plant and Equipment
At May 1, 2016, construction-in-progress consisted of approximately $541,000 of expenditures related to our ongoing Enterprise Resource Planning (“ERP”) conversion efforts and approximately $1.2 million of expenditures related to various other projects to enhance our facilities and operations.
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8. Fair Value Measurements |
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Fair Value Disclosures [Text Block] |
8.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the applicable measurement date. We use a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
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 May 1, 2016 and January 31, 2016, 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. The majority of our Company-owned life insurance policies are pledged as collateral for the secured term loan (which had a balance of $17.2 million balance at May 1, 2016) that is part of our original $90 million credit facility related to the Home Meridian acquisition (described in Note 10. “Debt” below).
As of May 1, 2016, a mortgage note receivable (related to the previously announced sale of our Cloverleaf facility during the fiscal 2015 first quarter) was measured at fair value on a non-recurring basis using Level 3 inputs. The note receivable was recorded at approximately $1.6 million, which was the face value of the note issued for the mortgage. The carrying value of the note receivable is assumed to approximate its fair value. We measure the probability to collect amounts due to us under this note receivable primarily based on the buyer’s payment history. Specifically, we consider the buyer’s adherence to the contractual payment terms for both the timeliness and payment amounts. Should it become probable that we would be unable to collect all amounts due according to the contractual terms of the underlying loan agreement, we would measure the note for impairment and record a valuation allowance against the note receivable, if needed, with the related expense charged to income for that period. The current portion of this note receivable is included on the “Prepaid expenses and other current assets” line of our condensed consolidated balance sheets. The non-current portion of this note receivable is included in the “Other assets” line of our condensed consolidated balance sheets.
As of May 1, 2016, the assets of the Home Meridian segment’s legacy Pension Plan (the “Plan”) were measured at fair value on a recurring basis based on Level 1 inputs. Pension plan assets, held in a trust account by the Plan’s trustee, primarily consist of a wide-range of mutual fund asset classes, including domestic and international equities, fixed income securities such as corporate bonds, mortgage-backed securities, real estate investments and U.S. Treasuries. As of the February 2, 2016, the date of the latest actuarial valuation, Plan assets were netted against the Plan’s Projected Benefit Obligation (“PBO”) on that date to determine the Plan’s funded status. Since the PBO exceeded the market value of the Plan’s assets, the funded status is recorded in our condensed consolidated balance sheets as a net liability. At May 1, 2016, the net liability for this plan was $6.2 million, with $1.2 million of that amount (representing expected benefit payments over the next twelve months) included in the “Accrued salaries, wages and benefits” line of our condensed consolidated balance sheets and $5.0 million shown on the “Pension Plan” line of our condensed consolidated balance sheets. The market value of pension plan assets shown below are as of February 2, 2016. See note 11. “Employee Benefit Plans” for additional information about the Plan.
Our assets measured at fair value on a recurring basis at May 1, 2016 and January 31, 2016, respectively, were as follows:
*February 2, 2016 for Pension plan assets
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9. Intangible Assets |
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Intangible Assets Disclosure [Text Block] |
9.
Intangible Assets
During the fiscal 2017 first quarter, we recorded both non-amortizable and amortizable intangible assets as a result of our acquisition of Home Meridian on February 1, 2016. The acquisition-related trade names, customer relationships and order backlog have been assigned preliminary fair values subject to additional analysis during the measurement period as we continue to gather information. Details of these new intangible assets, as well as previously recorded intangible assets assigned to our Upholstery and All other operating segments, are as follows:
All of our amortizable intangible assets are recorded in our Home Meridian segment. The carrying amounts and changes therein of those amortizable intangible assets were as follows:
The estimated amortization expense associated with our amortizable intangible assets is expected to be as follows:
The expected amortization expense will be approximately $815,000 in the fiscal 2017 second quarter and approximately $335,000 in each of the fiscal 2017 third and fourth quarters.
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10. Debt |
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Long-term Debt [Text Block] |
10.
Debt
On February 1, 2016, we entered into an amended and restated loan agreement (the “Loan Agreement”) with Bank of America, N.A. (“BofA”) in connection with the completion of the Home Meridian acquisition. Also on February 1, 2016, we borrowed in full the amounts available under the Unsecured Term Loan (the “Unsecured Term Loan”) and the Secured Term Loan (the “Secured Term Loan”) in connection with the completion of this acquisition.
Details of the individual credit facilities provided for in the Loan Agreement are as follows:
We may prepay any outstanding principal amounts borrowed under either the Unsecured Term Loan or the Secured Term Loan in full or in part on any interest payment date without penalty. Since the closing date we have made unscheduled payments of $5.0 million on the Unsecured Term Loan and $1.8 million on the Secured Term Loan, in addition to the regularly-scheduled debt service payments required by the Loan Agreement.
Additionally, we incurred $165,000 in debt issuance costs in connection with our terms loans. These costs are amortized over the life of the loan using the interest method and are included in the “interest expense” line of our condensed consolidated income statements. Unamortized debt issuance costs are netted against the carrying value of our term loans on our condensed consolidated balance sheets. As of May 1, 2016, unamortized loan costs of $153,000 were netted against the carrying value of our term loans on our condensed consolidated balance sheets.
The Loan Agreement also included customary representations and warranties and requires us to comply with customary covenants, including, among other things, the following financial covenants:
The 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. The Loan Agreement does 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 Loan Agreement.
We were in compliance with each of these financial covenants at May 1, 2016 and expect to remain in compliance with existing covenants through fiscal 2017 and for the foreseeable future.
As of May 1, 2016, we had an aggregate $28.2 million available under our revolving credit facility to fund working capital needs. Standby letters of credit in the aggregate amount of $1.8 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the revolving credit facility as of May 1, 2016. There were no additional borrowings outstanding under the revolving credit facility on May 1, 2016. Any principal outstanding under the revolving credit facility is due July 31, 2018.
Approximately $700,000 of the $1.8 million of our outstanding letters of credit relates to a letter of credit provided for our former captive insurance arrangement. That arrangement officially ended during the fiscal 2017 first quarter and we expect the related letter of credit to be released during the fiscal 2017 second quarter.
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11. Employee Benefit Plans |
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Pension and Other Postretirement Benefits Disclosure [Text Block] |
11.
Employee Benefit Plans
We maintain a supplemental retirement income plan (“SRIP”) for certain former and current executives of Hooker Furniture Corporation. Additionally, we assumed Home Meridian’s pension plan and other retirement plan liabilities upon completion of the Home Meridian acquisition on February 1, 2016. Home Meridian’s legacy pension plan obligations relate to Pulaski Furniture Corporation, one of two entities combined to form HMI. These legacy pension plan obligations include:
The SRIP, SERP and Pension plans are all “frozen” and we do not expect to add additional employees to any of these plans in the future. Pension plan assets include a range of mutual fund asset classes and are measured at fair value using level one inputs, which are quoted prices in active markets.
The consolidated liability for our pension plan obligations at May 1, 2016 and January 31, 2016 were $16.8 million and $8.2 million, respectively, and are shown in our condensed consolidated balance sheets as follows:
*Total Deferred Compensation shown in the Long-Term Liabilities section of our Condensed Consolidated Balance Sheets is $10.6 million at May 1, 2016 and $8.4 million at January 31, 2016. These totals include the SRIP and SERP amounts shown in the table above, as well as miscellaneous additional long-term compensation-related items unrelated to these plans.
Components of net periodic benefit cost for the SRIP, SERP and pension plans are included in our condensed consolidated statements of income under selling and administrative expenses.
The expected long-term rate of return on Pension Plan assets is 7.0% as of
the Plan’s most recent valuation date of February 2, 2016.
We contributed $146,000 in required contributions to the Pension Plan in the fiscal 2017 first quarter and expect to contribute an additional $450,000 in required contributions to the Pension Plan during fiscal 2017, typically once every fiscal quarter. The SRIP and SERP plans are unfunded plans. Consequently, we expect to pay a total of approximately $450,000 in benefit payments from our general assets during the remainder of fiscal 2017 to fund SRIP and SERP payments.
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12. Earnings Per Share |
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Earnings Per Share [Text Block] |
12.
Earnings Per Share
We refer you to the discussion of Earnings Per Share in Note 1-Summary of Significant Accounting Policies, in the financial statements included in our 2016 Annual Report, for additional information concerning the calculation of earnings per share.
We have issued restricted stock awards to non-employee members of the board of directors since 2006 and restricted stock units (RSUs) to certain senior executives since fiscal 2012 under the Company’s Stock Incentive Plan. Each RSU entitles an executive to receive one share of the Company’s common stock if the executive remains continuously employed with the Company through the end of a three-year service period. The RSUs may be paid in shares of our common stock, cash or both at the discretion of the Compensation Committee of our board of directors. We expect to continue to grant these types of awards annually in the future. The following table sets forth the number of outstanding restricted stock awards and RSUs, net of forfeitures and vested shares, as of the fiscal period-end dates indicated:
All restricted shares and RSUs awarded that have not yet vested are considered when computing diluted earnings per share. The following table sets forth the computation of basic and diluted earnings per share:
The increase in the number of shares is primarily due to the issuance of 716,910 shares of our common stock as a result of the Home Meridian acquisition on February 1, 2016.
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13. Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] |
13.
Income
Taxes
We recorded income tax expense of $1.4 million for the fiscal 2017 first quarter compared to $1.9 million for the comparable prior year period. The effective tax rates for the fiscal 2017 and 2016 first quarters were 35.8% and 35.4%, respectively. Our effective tax rate was higher in the fiscal 2017 first quarter as a result of a higher state rate due to the creation of tax nexus in additional states as part of the Home Meridian acquisition as well as the reduced impact of certain permanent differences as a result of the acquisition.
The net unrecognized tax benefits as of May 1, 2016 and January 31, 2016, which, if recognized, would affect our effective tax rate are $168,000 and $221,000, respectively.
Tax years ending February 3, 2013, through January 31, 2016 remain subject to examination by federal and state taxing authorities. An examination of the fiscal 2013 with federal taxing authorities was completed during fiscal 2016 with no changes. An examination of our North Carolina state tax returns for fiscal year 2012 and 2013 was completed during the quarter with no material changes.
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14. Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] |
14.
Segment Information
For financial reporting purposes, we are organized into four operating segments – Hooker Casegoods, Home Meridian, Upholstery and an All Other segment, which includes H Contract and Homeware. Based on the way in which we manage, evaluate and internally report our operations, we determined that Home Meridian’s newly acquired operations will be reported as a separate operating segment. The following table presents segment information for the periods, and as of the dates, indicated:
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15. Contingencies |
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May. 01, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] |
15.
Contingencies
Customs Penalty
In September 2009, U.S. Customs and Border Protection (“CBP”) issued an audit report asserting that we had not paid all required antidumping duties due with respect to certain bedroom furniture we imported from China. In February 2015, CBP assessed a civil penalty of approximately $2.1 million and unpaid duties of approximately $500,000 on the matter. In December 2015, in response to our petition to eliminate or modify the assessment, CBP revised the proposed penalty to approximately $1.7 million, while leaving the duty assessment at approximately $500,000. We continue to assert that no antidumping duties are due and that there is no basis for the imposition of a penalty. We intend to vigorously defend against the penalty. In the opinion of management, the ultimate disposition of this matter will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity.
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16. Subsequent Events |
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May. 01, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] |
16.
Subsequent Events
Dividends
On June 6, 2016, our board of directors declared a quarterly cash dividend of $0.10 per share, payable on June 30, 2016 to shareholders of record at June 16, 2016.
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3. Acquisition (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following table summarizes the preliminary estimates of the fair values of the identifiable assets acquired and liabilities assumed in the Acquisition as of May 1, 2016. The preliminary estimates of fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in adjustments to the preliminary values presented below, when management’s appraisals and estimates are finalized.
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Business Acquisition, Pro Forma Information [Table Text Block] | The following unaudited consolidated pro forma summary has been prepared by adjusting our historical data to give effect to the Acquisition as if it had occurred on February 1, 2015:
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4. Shareholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Outstanding Roll Forward [Table Text Block] | The number of shares and the amount of common stock outstanding changed materially from the end of the 2016 fiscal year, as a result of issuing 716,910 shares of common stock to the designees of HMI as partial consideration for the Acquisition. The table below reconciles the number of shares and amounts of common stock outstanding from our most recent fiscal year end to the end of the fiscal 2017 first quarter. The table shows the effects of the Acquisition issuance, as well as other activity in the common stock account unrelated to the Acquisition.
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5. Accounts Receivable (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] |
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6. Inventories (Tables) |
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Schedule of Inventory, Current [Table Text Block] |
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7. Property, Plant and Equipment (Tables) |
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Property, Plant and Equipment [Table Text Block] |
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8. Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | Our assets measured at fair value on a recurring basis at May 1, 2016 and January 31, 2016, respectively, were as follows:
*February 2, 2016 for Pension plan assets
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9. Intangible Assets (Tables) |
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Disclosure Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill [Table Text Block] |
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Schedule of Finite-Lived Intangible Assets [Table Text Block] | All of our amortizable intangible assets are recorded in our Home Meridian segment. The carrying amounts and changes therein of those amortizable intangible assets were as follows:
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Finite-lived Intangible Assets Amortization Expense [Table Text Block] | The estimated amortization expense associated with our amortizable intangible assets is expected to be as follows:
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11. Employee Benefit Plans (Tables) |
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Defined Benefit Plans Disclosures [Table Text Block] | The consolidated liability for our pension plan obligations at May 1, 2016 and January 31, 2016 were $16.8 million and $8.2 million, respectively, and are shown in our condensed consolidated balance sheets as follows:
*Total Deferred Compensation shown in the Long-Term Liabilities section of our Condensed Consolidated Balance Sheets is $10.6 million at May 1, 2016 and $8.4 million at January 31, 2016. These totals include the SRIP and SERP amounts shown in the table above, as well as miscellaneous additional long-term compensation-related items unrelated to these plans.
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Schedule of Net Benefit Costs [Table Text Block] | Components of net periodic benefit cost for the SRIP, SERP and pension plans are included in our condensed consolidated statements of income under selling and administrative expenses.
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12. Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | The following table sets forth the number of outstanding restricted stock awards and RSUs, net of forfeitures and vested shares, as of the fiscal period-end dates indicated:
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following table sets forth the computation of basic and diluted earnings per share:
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14. Segment Information (Tables) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The following table presents segment information for the periods, and as of the dates, indicated:
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Reconciliation of Assets from Segment to Consolidated [Table Text Block] | The following table presents segment information for the periods, and as of the dates, indicated:
|
1. Preparation of Interim Financial Statements (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Feb. 01, 2016 |
May. 01, 2016 |
May. 03, 2015 |
|
1. Preparation of Interim Financial Statements (Details) [Line Items] | |||
Payments to Acquire Businesses, Net of Cash Acquired | $ 86,062 | $ 0 | |
Home Meridian International [Member] | |||
1. Preparation of Interim Financial Statements (Details) [Line Items] | |||
Payments to Acquire Businesses, Net of Cash Acquired | $ 86,000 | ||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares) | 716,910 | ||
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 20,300 |
3. Acquisition (Details) - Schedule of Business Acquisitions, by Acquisition - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
May. 01, 2016 |
Feb. 01, 2016 |
Jan. 31, 2016 |
|
Purchase price consideration | |||
Goodwill | $ 23,398 | $ 0 | |
Home Meridian International [Member] | |||
Purchase price consideration | |||
Cash paid for assets acquired, including working capital adjustment | 86,062 | ||
Value of shares issued for assets acquired | 15,000 | ||
Value of shares issued for excess net working capital | 5,267 | ||
Total purchase price | 106,329 | ||
Accounts receivable | 46,210 | ||
Inventory | 37,606 | ||
Prepaid expenses and other current assets | 1,776 | ||
Property and equipment | 5,801 | ||
Intangible assets | 27,800 | ||
Goodwill | 23,398 | ||
Accounts payable | (22,681) | ||
Accrued expenses | (4,861) | ||
Pension plan liabilities and deferred compensation balances | (8,720) | $ (8,700) | |
Total purchase price | $ 106,329 |
3. Acquisition (Details) - Business Acquisition, Pro Forma Information - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
May. 01, 2016 |
May. 03, 2015 |
|
Business Acquisition, Pro Forma Information [Abstract] | ||
Net Sales | $ 121,831 | $ 125,800 |
Net Income | $ 2,500 | $ 2,690 |
Basic EPS | $ 0.22 | $ 0.23 |
Diluted EPS | $ 0.22 | $ 0.23 |
4. Shareholders' Equity (Details) |
Feb. 01, 2016
shares
|
---|---|
Home Meridian International [Member] | |
4. Shareholders' Equity (Details) [Line Items] | |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 716,910 |
4. Shareholders' Equity (Details) - Schedule of Common Stock Outstanding Roll Forward shares in Thousands, $ in Thousands |
3 Months Ended |
---|---|
May. 01, 2016
USD ($)
shares
| |
Schedule of Common Stock Outstanding Roll Forward [Abstract] | |
Oustanding shares January 31, 2016 (in Shares) | shares | 10,818 |
Oustanding shares January 31, 2016 | $ 18,667 |
Shares issued for Acquisition (in Shares) | shares | 717 |
Shares issued for Acquisition | $ 20,267 |
Restricted share grants (in Shares) | shares | 21 |
Restricted share grants | $ 413 |
Restricted stock compensation costs | $ 87 |
Oustanding shares May 1, 2016 (in Shares) | shares | 11,556 |
Oustanding shares May 1, 2016 | $ 39,434 |
5. Accounts Receivable (Details) - USD ($) |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
Receivables [Abstract] | ||
Accounts receivable factor recourse | $ 275,000 | $ 255,000 |
5. Accounts Receivable (Details) - Accounts Receivable - USD ($) $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
Accounts Receivable [Abstract] | ||
Trade accounts receivable | $ 61,344 | $ 25,520 |
Receivable from factor | 3,880 | 3,688 |
Allowance for doubtful accounts | (3,464) | (1,032) |
Accounts receivable | $ 61,760 | $ 28,176 |
6. Inventories (Details) - Schedule of Inventory, Current - USD ($) $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
Schedule of Inventory, Current [Abstract] | ||
Finished furniture | $ 88,881 | $ 55,120 |
Furniture in process | 960 | 727 |
Materials and supplies | 8,181 | 7,994 |
Inventories at FIFO | 98,022 | 63,841 |
Reduction to LIFO basis | (20,352) | (20,128) |
Inventories | $ 77,670 | $ 43,713 |
7. Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
7. Property, Plant and Equipment (Details) [Line Items] | ||
Construction in Progress, Gross | $ 1,779 | $ 846 |
Enterprise Resource Planning (ERP) [Member] | ||
7. Property, Plant and Equipment (Details) [Line Items] | ||
Construction in Progress, Gross | 541,000 | |
Various Other Projects to Enhance Facilities and Operations [Member] | ||
7. Property, Plant and Equipment (Details) [Line Items] | ||
Construction in Progress, Gross | $ 1,200 |
7. Property, Plant and Equipment (Details) - Property, Plant and Equipment - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May. 01, 2016 |
Jan. 31, 2016 |
|
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 58,622 | $ 48,594 |
Less accumulated depreciation | 33,276 | 27,739 |
Total depreciable property, net | 25,346 | 20,855 |
Land | 1,067 | 1,067 |
Construction-in-progress | 1,779 | 846 |
Property, plant and equipment, net | 28,192 | 22,768 |
Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 22,946 | 22,777 |
Computer Software and Hardware [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 18,460 | 16,137 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 5,302 | 4,864 |
Property, Plant and Equipment, Depreciable Lives | 10 | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 9,085 | 2,817 |
Property, Plant and Equipment, Depreciable Lives | 5 | |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 2,274 | 1,453 |
Property, Plant and Equipment, Other Types [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 555 | $ 546 |
Property, Plant and Equipment, Depreciable Lives | 5 | |
Minimum [Member] | Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Depreciable Lives | 15 | |
Minimum [Member] | Computer Software and Hardware [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Depreciable Lives | 3 | |
Minimum [Member] | Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Depreciable Lives | 3 | |
Maximum [Member] | Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Depreciable Lives | 30 | |
Maximum [Member] | Computer Software and Hardware [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Depreciable Lives | 10 | |
Maximum [Member] | Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Depreciable Lives | 8 |
8. Fair Value Measurements (Details) - USD ($) $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
8. Fair Value Measurements (Details) [Line Items] | ||
Long-term Debt, Fair Value | $ 17,200 | |
Line of Credit Facility, Maximum Borrowing Capacity | 90,000 | |
Notes Receivable, Fair Value Disclosure | 1,573 | $ 1,575 |
Employee-related Liabilities, Current | 4,771 | $ 4,834 |
Pension Plan [Member] | ||
8. Fair Value Measurements (Details) [Line Items] | ||
Defined Benefit Pension Plan, Liabilities | 6,200 | |
Defined Benefit Plan, Expected Future Benefit Payments, Next Twelve Months | 1,200 | |
Employee-related Liabilities, Current | $ 5,000 |
8. Fair Value Measurements (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis - USD ($) $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
|||
---|---|---|---|---|---|
Assets measured at fair value | |||||
Company-owned life insurance | $ 22,246 | $ 21,888 | |||
Mortgage note receivable | 1,573 | 1,575 | |||
Pension plan assets | 11,585 | [1] | 0 | ||
Fair Value, Inputs, Level 1 [Member] | |||||
Assets measured at fair value | |||||
Company-owned life insurance | 0 | 0 | |||
Mortgage note receivable | 0 | 0 | |||
Pension plan assets | 11,585 | [1] | 0 | ||
Fair Value, Inputs, Level 2 [Member] | |||||
Assets measured at fair value | |||||
Company-owned life insurance | 22,246 | 21,888 | |||
Mortgage note receivable | 0 | 0 | |||
Pension plan assets | 0 | [1] | 0 | ||
Fair Value, Inputs, Level 3 [Member] | |||||
Assets measured at fair value | |||||
Company-owned life insurance | 0 | 0 | |||
Mortgage note receivable | 1,573 | 1,575 | |||
Pension plan assets | $ 0 | [1] | $ 0 | ||
|
9. Intangible Assets (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2016 |
May. 01, 2016 |
May. 03, 2015 |
Jan. 29, 2017 |
|
9. Intangible Assets (Details) [Line Items] | ||||
Amortization of Intangible Assets | $ 1,654,000 | $ 0 | ||
Scenario, Forecast [Member] | ||||
9. Intangible Assets (Details) [Line Items] | ||||
Amortization of Intangible Assets | $ 815,000 | $ 335,000 |
9. Intangible Assets (Details) - Schedule of Intangible Assets - USD ($) $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
9. Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
Goodwill | $ 23,398 | $ 0 |
Total non-amortizable assets | 36,180 | 1,382 |
Casegoods [Member] | ||
9. Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
URL- Homeware.com | 125 | 125 |
Bradington-Young [Member] | Upholstery [Member] | ||
9. Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
Trademarks and trade names | 861 | 861 |
Sam Moore [Member] | Upholstery [Member] | ||
9. Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
Trademarks and trade names | 396 | 396 |
Home Meridian International [Member] | Home Meridian International [Member] | ||
9. Intangible Assets (Details) - Schedule of Intangible Assets [Line Items] | ||
Trademarks and trade names | $ 11,400 | $ 0 |
9. Intangible Assets (Details) - Schedule of Finite-Lived Intangible Assets - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May. 01, 2016 |
May. 03, 2015 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Balance at January 31, 2016 | $ 0 | |
Intangibles- HMI acquisition | 16,400 | |
Amortization | (1,654) | $ 0 |
Balance at May 1, 2016 | 14,746 | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance at January 31, 2016 | 0 | |
Intangibles- HMI acquisition | 14,400 | |
Amortization | (327) | |
Balance at May 1, 2016 | 14,073 | |
Order or Production Backlog [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance at January 31, 2016 | 0 | |
Intangibles- HMI acquisition | 1,800 | |
Amortization | (1,321) | |
Balance at May 1, 2016 | 479 | |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance at January 31, 2016 | 0 | |
Intangibles- HMI acquisition | 200 | |
Amortization | (6) | |
Balance at May 1, 2016 | $ 194 |
9. Intangible Assets (Details) - Finite-lived Intangible Assets Amortization Expense - USD ($) $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
Finite-lived Intangible Assets Amortization Expense [Abstract] | ||
Remainder of 2017 | $ 1,480 | |
2018 | 1,334 | |
2019 | 1,334 | |
2020 | 1,334 | |
2021 | 1,334 | |
Thereafter | 7,930 | |
$ 14,746 | $ 0 |
10. Debt (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
May. 01, 2016 |
May. 03, 2015 |
Feb. 01, 2016 |
|
10. Debt (Details) [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 90,000,000 | ||
Repayments of Long-term Debt | 7,797,000 | $ 0 | |
Debt Issuance Costs, Gross | 165,000 | ||
Debt Issuance Costs, Net | $ 153,000 | ||
Line of Credit Facility, Covenant Terms | § Maintain a tangible net worth of at least:□ As of the fiscal year-end January 31, 2016, $105.0 million plus 40% of net income before taxes earned in the 2016 fiscal year; and□ As of the end of each subsequent fiscal year, the minimum tangible net worth required for the prior fiscal year, plus 40% of net income, before taxes, earned in each subsequent fiscal year.§ Maintain a ratio of funded debt to EBITDA not exceeding:□ 2.50:1.0 through August 31, 2017;□ 2.25:1.0 through August 31, 2018; and□ 2.00:1.00 thereafter.§ A basic fixed charge coverage ratio of at least 1.25:1.00; and§ Limit capital expenditures to no more than $15.0 million during any fiscal year with expenditures to acquire fixed assets pursuant to the Acquisition being excluded for the fiscal year in which the Acquisition occurs. | ||
Unsecured Debt [Member] | |||
10. Debt (Details) [Line Items] | |||
Debt Instrument, Face Amount | $ 41,000,000 | $ 41,000,000 | |
Debt Instrument, Frequency of Periodic Payment | monthly | ||
Debt Instrument, Periodic Payment, Principal | $ 490,000 | ||
Debt Instrument, Maturity Date | Feb. 01, 2021 | ||
Repayments of Long-term Debt | $ 5,000,000 | ||
Unsecured Debt [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
10. Debt (Details) [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||
Secured Debt [Member] | |||
10. Debt (Details) [Line Items] | |||
Debt Instrument, Face Amount | $ 19,000,000 | 19,000,000 | |
Debt Instrument, Maturity Date | Feb. 01, 2021 | ||
Debt Instrument, Collateral | interest in certain Company-owned life insurance policies | ||
Repayments of Long-term Debt | $ 1,800,000 | ||
Secured Debt [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
10. Debt (Details) [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | ||
Line of Credit [Member] | |||
10. Debt (Details) [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 30,000,000 | 30,000,000 | |
Line of Credit Facility, Current Borrowing Capacity | $ 28,200,000 | ||
Line of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
10. Debt (Details) [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||
Letter of Credit [Member] | |||
10. Debt (Details) [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 4,000,000 | $ 4,000,000 | |
Letters of Credit Outstanding, Amount | 1,800,000 | ||
Provided by Former Captive Insurance Arrangement [Member] | Letter of Credit [Member] | |||
10. Debt (Details) [Line Items] | |||
Debt Instrument, Face Amount | $ 700,000 |
11. Employee Benefit Plans (Details) - USD ($) |
3 Months Ended | |
---|---|---|
May. 01, 2016 |
Jan. 31, 2016 |
|
11. Employee Benefit Plans (Details) [Line Items] | ||
Pension and Other Postretirement and Postemployment Benefit Plans, Liabilities, Current | $ 16,800,000 | $ 8,200,000 |
Deferred Compensation Liability, Classified, Noncurrent | 10,619,000 | $ 8,409,000 |
Defined Benefit Plan, Expected Future Benefit Payments, Remainder of Fiscal Year | $ 450,000 | |
Pension Plan [Member] | ||
11. Employee Benefit Plans (Details) [Line Items] | ||
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate | 7.00% | |
Defined Benefit Plan, Contributions by Employer | $ 146,000 | |
Defined Benefit Plan, Expected Contributions in Current Fiscal Year | $ 450,000 |
11. Employee Benefit Plans (Details) - Schedule of Defined Benefit Plans Disclosures - USD ($) $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
||
---|---|---|---|---|
Accrued salaries, wages and benefits (current portions) | ||||
Current portion | $ 1,807 | $ 354 | ||
Long-term portions | ||||
Deferred compensation | [1] | 10,064 | 7,799 | |
Home Meridian Pension Plan | 4,967 | 0 | ||
Total deferred compensation and pension plans | 15,031 | 7,799 | ||
Consolidated pension liabilities | 16,838 | 8,153 | ||
Supplemental Retirement Income Plan ("SRIP") [Member] | ||||
Accrued salaries, wages and benefits (current portions) | ||||
Current portion | 354 | 354 | ||
Long-term portions | ||||
Deferred compensation | 7,895 | 7,799 | ||
Supplemental Executive Retirement Plan ("SREP") [Member] | ||||
Accrued salaries, wages and benefits (current portions) | ||||
Current portion | 262 | 0 | ||
Long-term portions | ||||
Deferred compensation | 2,169 | 0 | ||
Pension Plan [Member] | ||||
Accrued salaries, wages and benefits (current portions) | ||||
Current portion | $ 1,191 | $ 0 | ||
|
11. Employee Benefit Plans (Details) - Schedule of Net Benefit Costs - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
May. 01, 2016 |
May. 03, 2015 |
|
SRIP: | ||
Consolidated net periodic benefit costs | $ 244 | $ 218 |
Supplemental Retirement Income Plan ("SRIP") [Member] | ||
SRIP: | ||
Service cost | 94 | 101 |
Interest cost | 85 | 72 |
Actuarial loss (gain) | (18) | 45 |
Total | 161 | 218 |
Supplemental Executive Retirement Plan ("SREP") [Member] | ||
SRIP: | ||
Interest cost | 22 | 0 |
Total | 22 | 0 |
Pension Plan [Member] | ||
SRIP: | ||
Interest cost | 188 | 0 |
Expected return on pension plan assets | (197) | |
Expected administrative expenses | 70 | 0 |
Total | $ 60 | $ 0 |
12. Earnings Per Share (Details) - Schedule of Restricted Stock and Restricted Stock Units - shares shares in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
12. Earnings Per Share (Details) - Schedule of Restricted Stock and Restricted Stock Units [Line Items] | ||
Number of Shares Outstanding | 50 | 38 |
Restricted Stock [Member] | ||
12. Earnings Per Share (Details) - Schedule of Restricted Stock and Restricted Stock Units [Line Items] | ||
Number of Shares Outstanding | 30 | 25 |
Restricted Stock Units (RSUs) [Member] | ||
12. Earnings Per Share (Details) - Schedule of Restricted Stock and Restricted Stock Units [Line Items] | ||
Number of Shares Outstanding | 20 | 13 |
12. Earnings Per Share (Details) - Schedule of Earnings Per Share, Basic and Diluted - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
May. 01, 2016 |
May. 03, 2015 |
|
Schedule of Earnings Per Share, Basic and Diluted [Abstract] | ||
Net income | $ 2,500 | $ 3,472 |
Less: Unvested participating restricted stock dividends | 3 | 3 |
Net earnings allocated to unvested participating restricted stock | 6 | 9 |
Earnings available for common shareholders | $ 2,491 | $ 3,460 |
Weighted average shares outstanding for basic earnings per share (in Shares) | 11,515 | 10,756 |
Dilutive effect of unvested restricted stock and RSU awards (in Shares) | 25 | 25 |
Weighted average shares outstanding for diluted earnings per share (in Shares) | 11,540 | 10,781 |
Basic earnings per share (in Dollars per share) | $ 0.22 | $ 0.32 |
Diluted earnings per share (in Dollars per share) | $ 0.22 | $ 0.32 |
13. Income Taxes (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
May. 01, 2016 |
May. 03, 2015 |
Jan. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Income Tax Expense (Benefit) | $ 1,397,000 | $ 1,902,000 | |
Effective Income Tax Rate Reconciliation, Percent | 35.80% | 35.40% | |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 168,000 | $ 221,000 |
14. Segment Information (Details) |
3 Months Ended |
---|---|
May. 01, 2016 | |
Segment Reporting [Abstract] | |
Number of Operating Segments | 4 |
14. Segment Information (Details) - Segment Reporting Information - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May. 01, 2016 |
May. 03, 2015 |
|
Net Sales | ||
Net Sales | $ 121,831 | $ 60,956 |
% of Net Sales | 100.00% | 100.00% |
Gross Profit & Margin | ||
Gross Profit | $ 26,599 | $ 16,375 |
% of Net Sales, Gross Profit | 21.80% | 26.90% |
Operating Income & Margin | ||
Operating Income | $ 4,001 | $ 5,242 |
% of Net Sales, Operating Income | 3.30% | 8.60% |
Capital Expenditures | ||
Capital Expenditures | $ 703 | $ 428 |
Depreciation & Amortization | ||
Depreciation & Amortization | 2,785 | 620 |
Intersegment Eliminations [Member] | ||
Net Sales | ||
Net Sales | 0 | (162) |
Gross Profit & Margin | ||
Gross Profit | 3 | 5 |
Operating Income & Margin | ||
Operating Income | 2 | 5 |
Casegoods [Member] | ||
Net Sales | ||
Net Sales | $ 32,929 | $ 38,483 |
% of Net Sales | 27.00% | 63.10% |
Gross Profit & Margin | ||
Gross Profit | $ 10,154 | $ 11,301 |
% of Net Sales, Gross Profit | 30.80% | 29.40% |
Operating Income & Margin | ||
Operating Income | $ 2,081 | $ 4,101 |
% of Net Sales, Operating Income | 6.30% | 10.70% |
Capital Expenditures | ||
Capital Expenditures | $ 380 | $ 369 |
Depreciation & Amortization | ||
Depreciation & Amortization | 536 | 397 |
Upholstery [Member] | ||
Net Sales | ||
Net Sales | $ 21,893 | $ 21,303 |
% of Net Sales | 18.00% | 34.90% |
Gross Profit & Margin | ||
Gross Profit | $ 5,076 | $ 4,718 |
% of Net Sales, Gross Profit | 23.20% | 22.10% |
Operating Income & Margin | ||
Operating Income | $ 1,763 | $ 1,447 |
% of Net Sales, Operating Income | 8.10% | 6.80% |
Capital Expenditures | ||
Capital Expenditures | $ 34 | $ 59 |
Depreciation & Amortization | ||
Depreciation & Amortization | 229 | 221 |
Home Meridian International [Member] | ||
Net Sales | ||
Net Sales | $ 64,976 | 0 |
% of Net Sales | 53.30% | |
Gross Profit & Margin | ||
Gross Profit | $ 10,710 | 0 |
% of Net Sales, Gross Profit | 16.50% | |
Operating Income & Margin | ||
Operating Income | $ 88 | 0 |
% of Net Sales, Operating Income | 0.10% | |
Capital Expenditures | ||
Capital Expenditures | $ 289 | 0 |
Depreciation & Amortization | ||
Depreciation & Amortization | 2,018 | |
Other Segments [Member] | ||
Net Sales | ||
Net Sales | $ 2,033 | $ 1,332 |
% of Net Sales | 1.70% | 2.20% |
Gross Profit & Margin | ||
Gross Profit | $ 656 | $ 351 |
% of Net Sales, Gross Profit | 32.30% | 26.40% |
Operating Income & Margin | ||
Operating Income | $ 67 | $ (311) |
% of Net Sales, Operating Income | 3.30% | (23.30%) |
Capital Expenditures | ||
Capital Expenditures | $ 0 | $ 0 |
Depreciation & Amortization | ||
Depreciation & Amortization | $ 2 | $ 2 |
14. Segment Information (Details) - Assets from Segments to Consolidated - USD ($) $ in Thousands |
May. 01, 2016 |
Jan. 31, 2016 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | $ 285,665 | $ 181,653 |
% Total Assets | 100.00% | 100.00% |
Intersegment Eliminations [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | $ (12) | $ (14) |
Casegoods [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | $ 122,396 | $ 146,794 |
% Total Assets | 42.80% | 80.80% |
Upholstery [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | $ 34,561 | $ 34,010 |
% Total Assets | 12.20% | 18.70% |
Home Meridian International [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | $ 127,818 | $ 0 |
% Total Assets | 44.70% | 0.00% |
Other Segments [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | $ 902 | $ 863 |
% Total Assets | 0.30% | 0.50% |
15. Contingencies (Details) - USD ($) |
1 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Feb. 28, 2015 |
|
Antidumping Duties, Civil Penalty [Member] | ||
15. Contingencies (Details) [Line Items] | ||
Loss Contingency, Damages Sought, Value | $ 1,700,000 | $ 2,100,000 |
Antidumping Duties [Member] | ||
15. Contingencies (Details) [Line Items] | ||
Loss Contingency, Damages Sought, Value | $ 500,000 | |
Loss Contingency Accrual | $ 500,000 |
16. Subsequent Events (Details) - $ / shares |
3 Months Ended | ||
---|---|---|---|
Jun. 06, 2016 |
May. 01, 2016 |
May. 03, 2015 |
|
16. Subsequent Events (Details) [Line Items] | |||
Common Stock, Dividends, Per Share, Declared | $ 0.10 | $ 0.10 | |
Subsequent Event [Member] | |||
16. Subsequent Events (Details) [Line Items] | |||
Dividends Payable, Date Declared | Jun. 06, 2016 | ||
Dividends Payable, Date to be Paid | Jun. 30, 2016 | ||
Dividends Payable, Date of Record | Jun. 16, 2016 | ||
Common Stock, Dividends, Per Share, Declared | $ 0.10 |
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