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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-Q



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Quarterly report pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934



For the
quarterly period ended May 31, 2003



Commission file
number 000-25349



HOOKER FURNITURE CORPORATION

(Exact name of registrant as specified in its charter)



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|Virginia                                                       |  | 54-0251350                       
|-------------------------------------------------------------- |  | ---------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)



440 East
Commonwealth Boulevard, Martinsville, VA 24112

(Address of principal executive offices, Zip Code)



(276) 632-0459

(Registrants telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



YES    x    
NO ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES ̈NO  x



Indicate the number of shares outstanding of each of the issuers classes of common stock as of July 3, 2003.



|Common stock, no par value |  | 7,237,650         
|-------------------------- |  | ------------------
|(Class of common stock)    |  | (Number of shares)



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PART I. FINANCIAL INFORMATION



Item 1.    Financial Statements



HOOKER FURNITURE CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, including share data)



|                                                                                                                       |  | May 31,2003 |         |   | November 30,2002 |  
|---------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | - | ---------------- | -
|Assets                                                                                                                 |  |             |         |   |                  |  
|Current assets:                                                                                                        |  |             |         |   |                  |  
|Cash and cash equivalents                                                                                              |  | $           | 3,211   |   |                  | $
|Trade receivables, less allowances of $792 and $800 on each date                                                       |  |             | 36,966  |   |                  |  
|Inventories                                                                                                            |  |             | 60,382  |   |                  |  
|Prepaid expenses and other                                                                                             |  |             | 2,566   |   |                  |  
|                                                                                                                       |  |             |         |   |                  |  
|Total current assets                                                                                                   |  |             | 103,125 |   |                  |  
|Property, plant, and equipment, net                                                                                    |  |             | 56,529  |   |                  |  
|Assets held for sale                                                                                                   |  |             | 740     |   |                  |  
|Intangible and other assets                                                                                            |  |             | 16,042  |   |                  |  
|                                                                                                                       |  |             |         |   |                  |  
|Total assets                                                                                                           |  | $           | 176,436 |   |                  | $
|                                                                                                                       |  |             |         |   |                  |  
|                                                                                                                       |  |            
|Liabilities and Shareholders Equity                                                                                   |  |             |         |   |                  |  
|Current liabilities:                                                                                                   |  |             |         |   |                  |  
|Trade accounts payable                                                                                                 |  | $           | 3,800   |   |                  | $
|Accrued salaries, wages, and benefits                                                                                  |  |             | 6,730   |   |                  |  
|Accrued income taxes                                                                                                   |  |             |         |   |                  |  
|Other accrued expenses                                                                                                 |  |             | 3,089   |   |                  |  
|Current maturities of long-term debt                                                                                   |  |             | 6,800   |   |                  |  
|                                                                                                                       |  |             |         |   |                  |  
|Total current liabilities                                                                                              |  |             | 20,419  |   |                  |  
|Long-term debt, less current maturities                                                                                |  |             | 43,419  |   |                  |  
|Other long-term liabilities                                                                                            |  |             | 4,882   |   |                  |  
|                                                                                                                       |  |             |         |   |                  |  
|Total liabilities                                                                                                      |  |             | 68,720  |   |                  |  
|                                                                                                                       |  |             |         |   |                  |  
|                                                                                                                       |  |            
|Shareholders equity:                                                                                                  |  |             |         |   |                  |  
|Common stock, no par value, 20,000 and 10,000 shares authorized; and, 7,238 shares issued and outstanding on each
date |  |             | 3,544   |   |                  |  
|Unearned ESOP shares (1,487 and 1,541 shares on each date)                                                             |  |             | (18,598 | ) |                  |  
|Retained earnings                                                                                                      |  |             | 125,603 |   |                  |  
|Accumulated other comprehensive loss                                                                                   |  |             | (2,833  | ) |                  |  
|                                                                                                                       |  |             |         |   |                  |  
|Total shareholders equity                                                                                             |  |             | 107,716 |   |                  |  
|                                                                                                                       |  |             |         |   |                  |  
|Total liabilities and shareholders equity                                                                             |  | $           | 176,436 |   |                  | $
|                                                                                                                       |  |             |         |   |                  |  





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



2



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HOOKER FURNITURE CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share
data)



|                                                  |  | Three MonthsEnded May 31, |        | Six MonthsEnded May 31,
|------------------------------------------------- |  | ------------------------- | ------ | -----------------------
|                                                  |  | 2003                      |        | 2002                   
|Net sales                                         |  | $                         | 80,115 |                        
|                                                  |  |                           |        |                        
|Cost of sales                                     |  |                           | 59,473 |                        
|                                                  |  |                           |        |                        
|Gross profit                                      |  |                           | 20,642 |                        
|                                                  |  |                           |        |                        
|Selling and administrative expenses               |  |                           | 14,401 |                        
|                                                  |  |                           |        |                        
|Restructuring and related asset impairment charge |  |                           | 1,470  |                        
|                                                  |  |                           |        |                        
|Operating income                                  |  |                           | 4,771  |                        
|                                                  |  |                           |        |                        
|Other income, net                                 |  |                           | 86     |                        
|                                                  |  |                           |        |                        
|Income before interest and income taxes           |  |                           | 4,857  |                        
|                                                  |  |                           |        |                        
|Interest expense                                  |  |                           | 671    |                        
|                                                  |  |                           |        |                        
|Income before income taxes                        |  |                           | 4,186  |                        
|                                                  |  |                           |        |                        
|Income taxes                                      |  |                           | 1,591  |                        
|                                                  |  |                           |        |                        
|Net income                                        |  | $                         | 2,595  |                        
|                                                  |  |                           |        |                        
|Earnings per share:                               |  |                           |        |                        
|Basic and diluted                                 |  | $                         | .45    |                        
|                                                  |  |                           |        |                        
|Weighted average shares outstanding               |  |                           | 5,750  |                        
|                                                  |  |                           |        |                        





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





3



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HOOKER FURNITURE CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                               |  | Six Months Ended |         
|------------------------------------------------------------------------------ |  | ---------------- | --------
|                                                                               |  | May 31,2003      |         
|Cash flows from operating activities                                           |  |                  |         
|Cash received from customers                                                   |  | $                | 157,231 
|Cash paid to suppliers and employees                                           |  |                  | (139,891
|Income taxes paid, net                                                         |  |                  | (7,965  
|Interest paid, net                                                             |  |                  | (1,135  
|                                                                               |  |                  |         
|Net cash provided by operating activities                                      |  |                  | 8,240   
|                                                                               |  |                  |         
|                                                                               |  |                 
|Cash flows from investing activities                                           |  |                  |         
|Purchase of property, plant, and equipment, net of disposals                   |  |                  | (2,451  
|Acquisition of Bradington-Young, net of cash acquired                          |  |                  | (22,140 
|Sale of property                                                               |  |                  |         
|                                                                               |  |                  |         
|Net cash used in investing activities                                          |  |                  | (24,591 
|                                                                               |  |                  |         
|                                                                               |  |                 
|Cash flows from financing activities                                           |  |                  |         
|Proceeds from long-term debt                                                   |  |                  | 76,319  
|Payments on long-term debt (including $4.1 million assumed in the acquisition) |  |                  | (54,876 
|Payment to terminate interest rate swap agreement                              |  |                  | (3,001  
|Cash dividends paid                                                            |  |                  | (1,196  
|Purchase and retirement of common stock                                        |  |                  |         
|                                                                               |  |                  |         
|Net cash provided by (used in) financing activities                            |  |                  | 17,246  
|                                                                               |  |                  |         
|Net increase in cash and cash equivalents                                      |  |                  | 895     
|Cash and cash equivalents at beginning of year                                 |  |                  | 2,316   
|                                                                               |  |                  |         
|Cash and cash equivalents at end of period                                     |  | $                | 3,211   
|                                                                               |  |                  |         
|                                                                               |  |                 
|Reconciliation of net income to net cash provided by operating activities      |  |                  |         
|Net income                                                                     |  | $                | 7,586   
|Depreciation and amortization                                                  |  |                  | 4,221   
|Non-cash ESOP cost                                                             |  |                  | 1,182   
|Restructuring and related asset impairment charge                              |  |                  | 1,470   
|Loss (gain) on disposal of property                                            |  |                  | 5       
|Changes in assets and liabilities, net of effects of acquisition:              |  |                  |         
|Trade receivables                                                              |  |                  | 2,367   
|Inventories                                                                    |  |                  | 701     
|Income tax recoverable                                                         |  |                  | (148    
|Prepaid expenses and other assets                                              |  |                  | (1,013  
|Trade accounts payable                                                         |  |                  | (3,593  
|Accrued salaries, wages, and benefits                                          |  |                  | (1,290  
|Accrued income taxes                                                           |  |                  | (3,169  
|Other accrued expenses                                                         |  |                  | (2,768  
|Other long-term liabilities                                                    |  |                  | 2,689   
|                                                                               |  |                  |         
|Net cash provided by operating activities                                      |  | $                | 8,240   
|                                                                               |  |                  |         



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



4



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HOOKER FURNITURE CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in tables in
thousands unless otherwise indicated)



|1. |  | Preparation of Interim Financial Statements
|-- |  | -------------------------------------------



The consolidated financial statements of Hooker Furniture Corporation (referred to as Hooker or the Company) have been prepared in accordance with
the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein.
All such adjustments are of a normal recurring nature. Certain information and footnote disclosures prepared in accordance with accounting principles generally accepted in the United States of America are condensed or omitted pursuant to SEC rules
and regulations. However, management believes that the disclosures made are adequate for a fair presentation of results of operations and financial position. Operating results for the interim periods reported herein may not be indicative of the
results expected for the year. These financial statements should be read in conjunction with the financial statements and accompanying notes included in the Companys Annual Report on Form 10-K for the fiscal year ended November 30, 2002.



|2. |  | Inventories
|-- |  | -----------



|                        |  | May 31,2003 |        | November 30,2002
|----------------------- |  | ----------- | ------ | ----------------
|Finished furniture      |  | $           | 56,021 |                 
|Furniture in process    |  |             | 2,834  |                 
|Materials and supplies  |  |             | 12,787 |                 
|                        |  |             |        |                 
|Inventories at FIFO     |  |             | 71,642 |                 
|Reduction to LIFO basis |  |             | 11,260 |                 
|                        |  |             |        |                 
|Inventories             |  | $           | 60,382 |                 
|                        |  |             |        |                 



|3. |  | Property, Plant, and Equipment
|-- |  | ------------------------------



|                                    |  | May 31,2003 |         | November 30,2002
|----------------------------------- |  | ----------- | ------- | ----------------
|Buildings                           |  | $           | 49,598  |                 
|Machinery and equipment             |  |             | 50,262  |                 
|Furniture and fixtures              |  |             | 24,291  |                 
|Other                               |  |             | 3,459   |                 
|                                    |  |             |         |                 
|Total depreciable property at cost  |  |             | 127,610 |                 
|Less accumulated depreciation       |  |             | 73,368  |                 
|                                    |  |             |         |                 
|Total depreciable property, net     |  |             | 54,242  |                 
|Land                                |  |             | 2,287   |                 
|                                    |  |             |         |                 
|Property, plant, and equipment, net |  | $           | 56,529  |                 
|                                    |  |             |         |                 



|4. |  | Acquisition
|-- |  | -----------



The Company, through a wholly owned subsidiary, completed its acquisition of substantially all of the assets of Cherryville, N.C.-based leather seating specialist Bradington-Young, LLC, on January 2, 2003. The Company
operates the upholstery operation under the Bradington-Young name and specializes in upscale leather reclining chairs, executive desk chairs and motion and stationary upholstery products in the upper-medium to high-end price niches. The Company
believes that Bradington-Youngs upholstery products complement its existing wood furniture product lines. The Company acquired the Bradington-Young operation for $24.5 million in cash less approximately $4.1 million in assumed debt, plus
a post-closing working capital adjustment of approximately $1.6 million paid during the 2003 second quarter.





5



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Notes to Consolidated Financial Statements  Continued



In addition, the Company capitalized acquisition-related fees of approximately $470,000, most
of which were paid during the first quarter of 2003. The acquisition was financed principally with $25.0 million in bank debt. See Note 5  Long-Term Debt.



The intangible assets recorded in conjunction with the acquisition are as follows:



|                                |  | May 31, 2003       
|------------------------------- |  | -------------------
|                                |  | GrossCarryingAmount
|Amortizable Intangible Assets   |  |                    
|Non-compete agreement           |  | $                  
|                                |  |                    
|Non-amortized Intangible Assets |  |                    
|Goodwill                        |  | $                  
|Trade names and trademarks      |  |                    
|                                |  |                    
|Total                           |  | $                  
|                                |  |                    



|5. |  | Long-Term Debt
|-- |  | --------------



|                         |  | May 31,2003 |        | November 30,2002
|------------------------ |  | ----------- | ------ | ----------------
|Revolving credit line    |  | $           | 1,000  |                 
|Term loan 1              |  |             |        |                 
|Term loan A              |  |             | 18,319 |                 
|Term loan B              |  |             | 24,500 |                 
|Industrial revenue bonds |  |             | 6,400  |                 
|                         |  |             |        |                 
|Total debt outstanding   |  |             | 50,219 |                 
|Less current maturities  |  |             | 6,800  |                 
|                         |  |             |        |                 
|Long-term debt           |  | $           | 43,419 |                 
|                         |  |             |        |                 



On January 2, 2003, the Company
borrowed $25.0 million in bank debt to acquire substantially all of the assets of Bradington-Young and to repay debt assumed as part of the acquisition. On April 30, 2003, the Company refinanced the bank debt used to acquire Bradington-Young,
Term Loan 1, and its revolving credit line.



The new unsecured
revolving credit line provides for borrowings of up to $15.0 million at a variable interest rate (2.3% on May 31, 2003). Interest is payable monthly. Principal is due April 30, 2005.



The new term loans bear interest at a variable rate (2.3% on May 31, 2003) and are unsecured. Principal and interest payments are due
quarterly through September 1, 2010 on Term Loan A and through March 1, 2008 on Term Loan B.



The Company entered into interest rate swap agreements in February 2003 that in effect provide a fixed interest rate of 4.1% on Term Loan A through 2010 and 4.0% on Term
Loan B through 2008. See Note 6  Derivatives.



The new credit
facility for the Companys revolving credit line and Term Loans A and B contains, among other things, financial covenants as to minimum tangible net worth, debt service coverage, the ratio of funded debt to earnings before interest, taxes,
depreciation, and amortization, and maximum capital expenditures. The Company was in compliance with these covenants as of May 31, 2003.



6



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Notes to Consolidated Financial Statements  Continued



Aggregate future maturities for the new revolving credit line, Term Loans A and B, and the
industrial revenue bonds as of May 31, 2003, are $2.2 million for the remainder of 2003, $8.7 million in 2004, $10.4 million in 2005, $9.4 million in 2006, $7.3 million in 2007, $6.3 million in 2008, and $5.9 million thereafter.



|6. |  | Derivatives
|-- |  | -----------



In February 2003, the Company in connection with the refinancing of its bank debt terminated an interest rate swap agreement that in effect provided a fixed interest rate of 7.4% on Term Loan 1 and entered into a new
interest rate swap agreement. The new agreement is on substantially the same terms as the terminated agreement, except that it provides for a fixed interest rate of 4.1% through 2010 on Term Loan A. The Companys payment of $3.0 million to
terminate the swap agreement is being amortized as interest expense over the seven and a half year repayment period, resulting in an effective fixed interest rate of 7.4% on Term Loan A.



Also in February 2003, the Company entered into a new interest rate swap agreement that in effect provides a fixed interest rate of 4.0%
through 2008 on Term Loan B. The Company is accounting for the new interest rate swap agreements for Term Loans A and B as cash flow hedges.



The Company has recognized a decrease in the aggregate fair market value of its interest rate swap agreements, resulting from the general decline in interest rates since
the inception of those agreements. The aggregate decrease in the fair market value of the effective portion of the agreements of $2.8 million after tax ($4.6 million pretax) as of May 31, 2003, and $1.9 million after tax ($3.1 million pretax)
as of November 30, 2002, is reflected under the caption accumulated other comprehensive loss in the consolidated balance sheets.



|7. |  | Comprehensive Income
|-- |  | --------------------



|                                                                            |  | Three Months EndedMay 31, |       |   | Six Months EndedMay 31, |  
|--------------------------------------------------------------------------- |  | ------------------------- | ----- | - | ----------------------- | -
|                                                                            |  | 2003                      |       |   | 2002                    |  
|Net income                                                                  |  | $                         | 2,595 |   |                         | $
|                                                                            |  |                           |       |   |                         |  
|Loss on interest rate swaps                                                 |  |                           | 935   |   |                         |  
|Portion of interest rate swaps fair value reclassified to interest expense |  |                           | 341   |   |                         |  
|                                                                            |  |                           |       |   |                         |  
|Other comprehensive (income) loss before tax                                |  |                           | 594   |   |                         |  
|Income tax (benefit) expense                                                |  |                           | (226  | ) |                         |  
|                                                                            |  |                           |       |   |                         |  
|Other comprehensive (income) loss, net of tax                               |  |                           | 368   |   |                         |  
|                                                                            |  |                           |       |   |                         |  
|Comprehensive income                                                        |  | $                         | 2,227 |   |                         | $
|                                                                            |  |                           |       |   |                         |  



The amount reclassified to interest
expense includes $98,000 for the six-month period ended May 31, 2003 and $19,000 and $44,000 for the three and six-month periods ended May 31, 2002, respectively, related to the ineffective portion of the interest rate swap agreements.



|8. |  | Supplemental Schedule of Non-cash Investing Activities
|-- |  | ------------------------------------------------------



|                                                                                                |  | Six Months EndedMay 31, 2003
|----------------------------------------------------------------------------------------------- |  | ----------------------------
|Acquisition of Bradington-Young:                                                                |  |                             
|Fair value of assets acquired (including cash of $462)                                          |  | $                           
|Cash paid (including fees of $470 and a post closing workingcapital adjustment of $1.6 million) |  |                             
|                                                                                                |  |                             
|Liabilities assumed (including debt of $4.1 million)                                            |  | $                           
|                                                                                                |  |                             



7



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Notes to Consolidated Financial Statements  Continued



|9. |  | Common Stock
|-- |  | ------------



At the March 28, 2003 meeting of shareholders an amendment to the Companys articles of incorporation was approved to increase the number of authorized shares of the Companys Common Stock from 10 million to
20 million shares.



In 2001, the Companys Board of Directors authorized
the repurchase of up to an aggregate $5.2 million of the Companys common stock. Repurchases were authorized to be made from time to time in the open market, or in privately negotiated transactions, at prevailing market prices that the Company
deems appropriate. Through May 31, 2003, the Company has repurchased 292,000 shares under the authorization, at a total cost of $2.5 million or an average of $8.58 per share. The Company did not purchase any shares of its common stock under this
program during the first half of 2003. Based on the market value of the common stock as of May 31, 2003, the remaining $2.7 million of the authorization would allow the Company to repurchase approximately 1.3% of the 7.2 million shares outstanding,
or 1.9% of the Companys outstanding shares excluding the 2.3 million shares held by the ESOP.



|10. |  | Restructuring Charge and Assets Held for Sale
|--- |  | ---------------------------------------------



In May 2003, the Company recorded a $1.5 million pretax ($911,000 after tax) restructuring and asset impairment charge related to the previously announced closing of its
Kernersville, NC manufacturing facility, scheduled for August 2003. The restructuring and asset impairment charge consisted of $1.3 million in severance and related benefits to be paid to approximately 270 terminated hourly and salaried employees
and approximately $200,000 in related asset impairment costs. Substantially all of the severance and related benefits will be paid to terminated employees in the 2003 third quarter.



In connection with the announced closing of the Kernersville plant, the Company intends to sell the facility and has reclassified these
assets to assets held for sale on the consolidated balance sheet as of May 31, 2003. The $740,000 carrying value of these assets approximates appraised fair value less estimated selling expenses. The Company expects to move the
production of patterns and products currently manufactured at the Kernersville plant to other Company facilities.



8



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|Item |  | 2.    Managements Discussion and Analysis
|---- |  | ------------------------------------------



Results of Operations



Net sales of $80.1 million for the second quarter ended May 31, 2003, increased 28.7% from $62.3 million in the second quarter of 2002. For the first half of 2003, net sales of $154.6 million increased 25.5% from
$123.2 million in the first half of 2002. Sales increases in both 2003 periods can be attributed to both internal growth within the Companys wood furniture operations and growth resulting from the Companys recent acquisition of leather
upholstery specialist Bradington-Young. Net sales for the Companys wood furniture business increased $5.7 million or 9.1% to $67.9 million for the 2003 quarter compared with $62.3 million in the 2002 quarter. For the first half, net sales for
the wood furniture business increased $10.5 million, or 8.5%, to $133.7 million from $123.2 million in the first half of 2002.



Upholstery shipments accounted for $12.2 million in the 2003 second quarter and $20.9 million since the division was acquired at the beginning of January this year. For
the 2003 second quarter, shipments of imported products increased $15.0 million, or 64.3%, to $38.4 million compared with $23.4 million in the 2002 three-month period. Shipments of the Companys domestically produced wood furniture declined
$9.4 million, or 24.1%, to $29.5 million from $38.9 million in last years second quarter. Shipments of imported products for the first half of 2003 increased $30.1 million, or 69.7%, to $73.2 million, compared with $43.1 million in the 2002
six-month period. Domestically produced wood furniture shipments for the 2003 first half decreased $19.4 million, or 24.3%, to $60.5 million from $80.0 million in the first half of 2002. Average selling prices for domestically produced wood
furniture decreased during the 2003 periods while the average selling prices for imported wood furniture products increased. Overall average selling prices declined during the 2003 periods, due to the larger proportion of lower-priced imported
products shipped.



For the second quarter of 2003, the Companys gross
profit margin of 25.8% improved modestly from the same period in 2002. For the first half of 2003, gross profit margin increased to 26.6% of net sales, compared to 25.5% during the same 2002 period. The improvement in the 2003 periods was due
primarily to increased shipments of imported products. As a percentage of net sales, imported products generally reflect higher gross profit margins than domestically produced wood furniture. However, imported products also carry a higher component
of selling and administrative expenses than domestically produced wood furniture, primarily for product sourcing, warehousing, and distribution.



The Companys gross profit margin for its imported products declined during the 2003 periods principally due to higher inbound freight and other transit related
costs. The gross profit margins for upholstery products manufactured by Bradington-Young have been comparable to the gross profit margins the Company achieves on its domestically produced wood furniture products, ranging typically from 20-25% of net
sales.



During the 2003 periods, the Companys domestic wood furniture
manufacturing operations continued to experience reductions in raw material costs as a percentage of sales volume compared to the prior year period. However, these improvements were offset by increased labor and overhead costs as a percentage of
sales volume, resulting from inefficiencies created by reduced work schedules during the first half of 2003 and weather-related downtime experienced during the 2003 first quarter.



The Companys manufacturing employees continued to work reduced, 35-hour work schedules in all domestic wood furniture plants for the
2003 second quarter and also took an additional week down in April to control inventory levels, reflecting the weakness in incoming orders. Selected plants also shut down for a week in May. In comparison, the Companys domestic wood furniture
factories worked full 40





9



---

Managements Discussion and Analysis  Continued



hour-per-week schedules from January through May of 2002. Bradington-Youngs upholstery
facilities continued to operate on reduced, 36-hour work schedules during the 2003-second quarter.



Selling and administrative expenses as a percentage of net sales for the second quarter of 2003 increased to 18.0% compared to 17.2% in the 2002 quarter and increased to 17.1% for the 2003 first half compared to 16.7%
in the 2002 six-month period. The increase in selling and administrative expenses as a percentage of net sales in the 2003 periods is principally due to increased selling, warehousing and distribution costs to support higher volumes of imported
products. The dollar amounts of selling and administrative expenses increased $3.7 million, during the 2003 second quarter and $5.9 million during the 2003 first half, mainly due to the addition of selling and administrative expenses for
Bradington-Young and the increased import-related costs mentioned above.



Profitability for the second quarter and the first half of 2003 was negatively impacted by a $1.5 million pretax ($911,000 after tax, or $0.16 per share) restructuring and asset impairment charge related to the previously announced closing
of the Companys Kernersville, NC manufacturing facility, scheduled for August 2003. The restructuring and asset impairment charge consisted of $1.3 million in severance and related benefits to be paid to approximately 270 terminated hourly and
salaried employees and approximately $200,000 in related asset impairment costs. Substantially all of the severance and related benefits will be paid to terminated employees in the 2003 third quarter. This special charge (before taxes) reduced
operating income by 1.8% of net sales for the 2003 second quarter and 1.0% of net sales for the first half of 2003. Beginning in the fourth quarter of 2003, the Company anticipates a production cost savings of approximately $750,000 to $1.1 million
annually as a result of the plant closing.



In connection with the announced
closing of the Kernersville plant, the Company intends to sell the facility and has reclassified these assets to assets held for sale on the consolidated balance sheet as of May 31, 2003. The $740,000 carrying value of these assets
approximates appraised fair value less estimated selling expenses. The Company expects to move the production of patterns and products currently manufactured at the Kernersville plant to other Company facilities.



As a result of the above, operating income as a percentage of net sales declined to 6.0% in
the 2003 quarterly period, compared to 8.6% for the 2002-second quarter. Operating income as a percentage of net sales declined to 8.6% in the 2003 first half, compared to 8.8% for the 2002 first half.



Other income, net decreased to $86,000 in the 2003-second quarter from $140,000 in the 2002
quarter. For the first half of 2003, other income declined to $276,000 from $308,000 in the first half of 2002. The decreases in the 2003 periods resulted principally from declines in interest income recorded due to lower levels of invested cash.



Interest expense increased $169,000 to $671,000 during the second quarter of
2003 from $502,000 in the 2002 period. For the first half of 2003, interest expense increased $300,000 to $1.3 million compared to $1.0 million in the first half of 2002. The increase in interest expense during the 2003 periods is due to higher debt
levels partially offset by lower average interest rates on the Companys borrowings.



The Companys effective tax rate approximated 38.0% in each of the 2003 and 2002 three and six-month periods.



For the 2003-second quarter, net income was $2.6 million, or $0.45 per share, compared to $3.1 million or $0.55 in the 2002 quarterly period. Net income for the first six
months of 2003 increased 20.2% to $7.6 million, or $1.33 per share, compared with $6.3 million or $1.12 per share in the 2002 first half. The restructuring charge (after tax) discussed above reduced earnings per share by $0.16 in each of the 2003
periods.



10



---

Managements Discussion and Analysis  Continued



Outlook



At the end of the just-completed quarter, the Company saw a modest up-tick in incoming orders during Memorial Day retail sales promotions
held across the nation. Most of the Companys retailers had strong Memorial Day events and a sustained increase in the several weeks that followed.



The Company remains focused on improving its domestically made product sales, and is pleased with the vibrant growth of its imported product line. The Company expects to
see continued growth in its imported product line, partially offset by sluggish sales in its domestically produced wood furniture into the third quarter. Conditions remain sluggish for furniture retailers and consumer confidence remains low. The
long-term outlook, however, is more positive. After several months of solid stock market gains, low interest rates and with the war settled, the Company hopes to see a rebound in consumer confidence and retail by late summer or early fall. The
Company believes the sales activity in the Bradington-Young line is typical for the upholstery industry in general today.



In its announcement of the pending Kernersville, N.C. plant closing last month, the Company stated that the closing would bring its wood furniture manufacturing capacity
more in line with incoming orders. However, incoming orders are not yet at levels sufficient to run four plants full time this summer.



The Company expects to stay on 35-hour workweeks for the foreseeable future and will shut down its wood furniture factories for the traditional July 4thweek to conduct required annual maintenance on its facilities. In addition, the Company expects to shut down selected
facilities for an additional week in July and all facilities for an additional week in each of August and September. The Kernersville facility will operate on reduced, 35-hour weekly work schedules beginning the week after the July 4thshutdown until its operations wind down in early to mid-August 2003. The Company expects Bradington-Young to continue working
on reduced schedules of 31-36 hours per week through July 2003. Additionally, the upholstery facilities will shut down for two weeks in July 2003.



Acquisition



The Company, through a wholly owned subsidiary, completed its acquisition of substantially all of the assets of Cherryville, N.C.-based leather seating specialist Bradington-Young, LLC, on January 2, 2003. The Company
operates the upholstery operation under the Bradington-Young name and specializes in upscale leather reclining chairs, executive desk chairs and motion and stationary upholstery in the upper-medium to high-end price niches. The Company acquired the
Bradington-Young operation for $24.5 million in cash less approximately $4.1 million in assumed debt, plus a post-closing working capital adjustment of approximately $1.6 million paid during the second quarter of 2003. In addition, the Company
capitalized acquisition-related fees of approximately $470,000, most of which were incurred during the first quarter of 2003. The acquisition was financed principally with $25.0 million in bank debt.



Financial Condition, Liquidity, and Capital Resources



As of May 31, 2003, assets totaled $176.4 million, increasing from $149.9 million at
November 30, 2002 as a result of the acquisition of Bradington-Young. Shareholders equity at May 31, 2003 was $107.7 million, compared to $101.0 million at November 30, 2002. The Companys long-term debt, including current maturities, was
$50.2 million at May 31, 2003, increasing from $24.7 million at November 30, 2002. This increase is attributed to the increase in bank debt incurred to acquire Bradington-Young. Working capital increased to $82.7 million as of May 31, 2003, from
$71.4 million at the end of fiscal 2002, reflecting the combined effects of a $9.9 million increase in current assets and a $1.5 million decrease in current liabilities. The increase in current assets, which principally resulted from the acquisition
of Bradington-Young, includes increases of $5.4 million in inventories, $3.2 million in trade receivables, $895,000 in cash, and $341,000 in other current assets.



11



---

The decline in current liabilities is due to the payment of accrued income taxes and decreases in trade accounts payables
and other accrued expenses, partially offset by increases in current maturities and accrued salaries, wages, and benefits.



During the six months ended May 31, 2003, proceeds from borrowings ($76.3 million) and cash generated from operations ($8.2 million), funded the acquisition of
Bradington-Young ($22.1 million, net of cash acquired), the refinancing and repayment of long-term debt ($54.9 million, including the repayment of $4.1 million of debt assumed in the Bradington-Young acquisition), a payment to terminate an interest
rate swap agreement ($3.0 million), capital expenditures ($2.5 million), an increase in available cash ($895,000), and dividend payments ($1.2 million).



During the 2002 six-month period, cash generated from operations ($16.9 million) funded an increase in available cash ($11.1 million), capital expenditures ($3.1
million), repayments of long-term debt ($1.3 million), dividend payments ($752,000), and the purchase and retirement of common stock ($545,000).



Cash generated from operations of $8.2 million during the 2003 period decreased $8.6 million from $16.9 million in the 2002 period. The decrease was due to higher
payments to suppliers and employees and higher income tax and interest payments, partially offset by higher payments received from customers. Payments to suppliers and employees increased $35.4 million, principally to fund increased purchases of
imported wood furniture products, the production of upholstery products and the operating costs of Bradington-Young since January 2003, and higher selling and administrative expenses, partially offset by reduced cash requirements to support lower
domestic wood furniture production levels. Cash received from customers increased $32.4 million as a result of higher wood furniture sales and Bradington-Young upholstery products sales since January 2003. Tax payments increased $5.3 million
principally due to the timing of amounts due in each respective period.



Investing activities consumed $24.6 million during the 2003 period compared to $3.1 million in the 2002 period. The Company purchased Bradington-Young for cash payments totaling $22.1 million (net of cash acquired). Purchases of plant,
equipment, and other assets to maintain and enhance the Companys facilities and business operating systems declined $670,000 in the 2003 first quarter compared with the 2002 period.



The Company generated cash of $17.2 million from financing activities in the 2003 period compared to using cash of $2.6 million for
financing activities in the 2002 first half. During the 2003 period, the Company borrowed (i) $42.8 million under new term loan agreements ($18.3 million under Term Loan A and $24.5 million under Term Loan B) to complete the
refinancing of its long-term debt in April 2003, (ii) $26.7 million to fund the purchase of Bradington-Young and to repay debt assumed in the acquisition, and (iii) $6.8 million under its revolving credit line to fund other operating,
investing, and financing cash flow activities. Also during the 2003 quarter, the Company repaid (i) $17.8 million under its existing Term Loan 1 and the $25.0 million in bank debt used to acquire Bradington-Young, primarily in connection
with refinancing its long-term debt, (ii) $8.0 million under its revolving credit line, and (iii) $4.1 million of debt assumed in the Bradington-Young acquisition. The Company also paid $3.0 million to terminate an interest rate swap agreement and
paid dividends of $1.2 million during the 2003 six-month period.



During the
2002 period, the Company repaid $1.3 million of long-term debt, paid dividends of $752,000, and redeemed 30,000 shares of common stock from terminating ESOP participants at a total cost of $545,000, as required by the terms of the ESOP.



In February 2003, the Company, in connection with the refinancing of its bank debt,
terminated an interest rate swap agreement that in effect provided a fixed interest rate of 7.4% on Term Loan 1 and entered into a new interest rate swap agreement. The new agreement is on substantially the same terms as



12



---

Managements Discussion and Analysis  Continued



the terminated agreement, except that it provides for a fixed interest rate of 4.1% through
2010 on Term Loan A. The Companys payment of $3.0 million to terminate the swap agreement is being amortized as interest expense over the seven and a half year repayment period, resulting in an effective fixed interest rate of 7.4% on Term
Loan A.



Also in February 2003, the Company entered into a new interest rate
swap agreement that in effect provides a fixed interest rate of 4.0% through 2008 on Term Loan B. The Company is accounting for the new interest rate swap agreements for Term Loans A and B as cash flow hedges.



The Company has recognized a decrease in the aggregate fair market value of its interest rate
swap agreements, resulting from the general decline in interest rates since the inception of those agreements. The aggregate decrease in the fair market value of the effective portion of the agreements of $2.8 million after tax ($4.6 million pretax)
as of May 31, 2003, and $1.9 million after tax ($3.1 million pretax) as of November 30, 2002, is reflected under the caption accumulated other comprehensive loss in the consolidated balance sheets.



In 2001, the Companys Board of Directors authorized the repurchase of up to an
aggregate $5.2 million of the Companys common stock. Repurchases were authorized to be made from time to time in the open market, or in privately negotiated transactions, at prevailing market prices that the Company deems appropriate. Through
May 31, 2003, the Company has repurchased 292,000 shares under the authorization, at a total cost of $2.5 million or an average of $8.58 per share. The Company did not purchase any shares of its common stock under this program during the first half
of 2003. Based on the market value of the common stock as of May 31, 2003, the remaining $2.7 million of the authorization would allow the Company to repurchase approximately 1.3% of the 7.2 million shares outstanding, or 1.9% of the Companys
outstanding shares excluding the 2.3 million shares held by the ESOP.



At its
June 24, 2003 meeting, the Companys Board of Directors declared a dividend of $0.11 per share, payable on August 29, 2003 to shareholders of record August 15, 2003.



At the March 28, 2003 meeting of shareholders, an amendment to the Companys articles of incorporation was approved to increase the
number of authorized shares of the Companys Common Stock from 10 million to 20 million shares.



The credit facility for the Companys revolving credit line and Term Loans A and B contains, among other things, financial covenants as to minimum tangible net worth, debt service coverage, the ratio of funded
debt to earnings before interest, taxes, depreciation, and amortization, and maximum capital expenditures. The Company was in compliance with these covenants as of May 31, 2003.



As of May 31, 2003, the Company had $13.6 million available under its revolving credit line, $26.7 million available under additional
committed lines of credit, and $11.9 million available under additional informal lines of credit to fund working capital needs. The Company believes it has the financial resources (including available cash, expected cash flow from operations, and
lines of credit) needed to meet business requirements for the foreseeable future including capital expenditures, working capital, purchases under the stock repurchase program, and dividends on the Companys common stock. Cash flow from
operations is highly dependent on order rates and the Companys operating performance. The Company expects to spend $1.0 to $3.0 million in capital expenditures during the remainder of fiscal 2003 to maintain and enhance its facilities and
operating systems.



13



---

Managements Discussion and Analysis  Continued



Forward-Looking Statements



Certain statements made in this report are not based on historical facts, but are
forward-looking statements. These statements can be identified by the use of forward-looking terminology such as believes, expects, may, will, should, would, or
anticipates, or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy. These statements reflect the Companys reasonable judgment with respect to future events and are subject to
risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Those risks and uncertainties include but are not limited to the cyclical nature of the furniture industry, domestic and
international competition in the furniture industry, general economic or business conditions, both domestically and internationally, fluctuations in the price of key raw materials including lumber and leather, supply disruptions or delays affecting
imported products, adverse political acts or developments in the international markets from which the Company imports products, fluctuations in foreign currency exchange rates affecting the price of the Companys imported products, and capital
costs.



Item 3.    Quantitative and Qualitative
Disclosures About Market Risk



The Company is exposed to market risk from
changes in interest rates and foreign currency exchange rates, which could impact its results of operations and financial condition. The Company manages its exposure to these risks through its normal operating and financing activities and through
the use of interest rate swap agreements with respect to interest rates.



The
Companys obligations under its lines of credit, industrial revenue bonds, and term loans, all bear interest at variable rates. The Company has entered into interest rate swap agreements that, in effect, fix the rate of interest on: (i) the
industrial revenue bonds at 4.7% through 2006; (ii) Term Loan A at 4.1% through 2010; and, (iii) Term Loan B at 4.0% through 2008. The Companys outstanding debt (including current maturities) as of May 31, 2003 amounted to $6.4 million under
the industrial revenue bonds, $18.3 million under Term Loan A, and $24.5 million under Term Loan B. As of May 31, 2003, $1.0 million was outstanding under the Companys revolving credit line. A fluctuation in market interest rates of one
percentage point (or 100 basis points) would not have a material impact on the Companys results of operations or financial condition.



For imported products, the Company generally negotiates firm pricing with its foreign suppliers, for periods typically of up to one year. The Company accepts the exposure
to exchange rate movements beyond these negotiated periods without using derivative financial instruments to manage this risk. Since the Company transacts its purchases of import products in U.S. Dollars, a decline in the relative value of the U.S.
Dollar could increase the cost of imported products when the Company renegotiates pricing. As a result, a weakening U.S. Dollar exchange rate could adversely impact sales volume and profit margins during such periods. However, the Company generally
expects to reflect substantially all of the effect of any price changes from suppliers in the price it charges for its imported products.



Item 4.    Controls and Procedures



Based on their most recent review, which was completed within 90 days of the filing of this report, the Companys principal executive officer and principal financial
officer have concluded that the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as
amended, is accumulated and communicated to the Companys management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure and are effective to ensure
that such information is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. There were no significant changes in the Companys



14



---

Controls and Procedures  Continued



internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation.



Item 5.    Other Information



Set forth below is the Companys income before interest and taxes, or EBIT, and income
before interest, taxes, depreciation and amortization, or EBITDA, for the three and six-month periods ended May 31, 2003 and 2002. This information has been derived from the Companys consolidated financial statements. For each period
presented, EBIT and EBITDA have been reconciled to the Companys net income. The Company provides these non-GAAP financial measures because it believes they are widely accepted financial indicators of the Companys performance. This
information should be read in conjunction with the Financial Statements, including the related Notes, and Managements Discussion and Analysis included elsewhere in this quarterly report on Form 10-Q and in the Companys annual report on
Form 10-K for the year ended November 30, 2002.



|                                                                    |  | For the Three MonthsEnded May 31, |       | For the Six MonthsEnded May 31,
|------------------------------------------------------------------- |  | --------------------------------- | ----- | -------------------------------
|                                                                    |  | 2003                              |       | 2002                           
|Net income                                                          |  | $                                 | 2,595 |                                
|Income taxes                                                        |  |                                   | 1,591 |                                
|Interest expense                                                    |  |                                   | 671   |                                
|                                                                    |  |                                   |       |                                
|Income before interest and income taxes                             |  |                                   | 4,857 |                                
|Depreciation and amortization                                       |  |                                   | 2,190 |                                
|                                                                    |  |                                   |       |                                
|Income before interest, income taxes,depreciation, and amortization |  | $                                 | 7,047 |                                
|                                                                    |  |                                   |       |                                





15



---

HOOKER FURNITURE CORPORATION



PART II. OTHER INFORMATION



Item 4.    Submission of Matters to a Vote of Security Holders



On March 28, 2003, the Company held its Annual Meeting of Shareholders. At the meeting, the following business was transacted:



The following directors of the Company were elected for a term of one year. The votes cast
for the election of each director were:



|Director                   |  | For       |  | Withheld | *
|-------------------------- |  | --------- |  | -------- | -
|                           |  |          
|Paul B. Toms, Jr.          |  | 6,509,623 |  | 4,509    |  
|Douglas C. Williams        |  | 6,508,006 |  | 6,126    |  
|J. Clyde Hooker            |  | 6,510,355 |  | 3,777    |  
|W. Christopher Beeler, Jr. |  | 6,509,978 |  | 4,154    |  
|Alan D. Cole               |  | 6,509,278 |  | 4,854    |  
|John L. Gregory, III       |  | 6,510,355 |  | 3,777    |  
|Irving M. Groves, Jr.      |  | 6,509,355 |  | 4,777    |  
|A. Frank Hooker, Jr.       |  | 6,508,373 |  | 5,759    |  
|Robert A. Taylor           |  | 6,509,978 |  | 4,154    |  
|L. Dudley Walker           |  | 6,509,978 |  | 4,154    |  



*Including abstentions.



The shareholders approved a proposal to amend the Companys Amended and Restated
Articles of Incorporation to increase the number of authorized shares of the Companys Common Stock from 10 million to 20 million shares. The votes cast were:



For  6,448,407                 Against
 63,204                 Abstain  2,521



The shareholders also ratified the selection of KPMG LLP as the Companys independent accountants for fiscal year 2003. The votes cast were:



For 
6,511,413                 Against 
587                      Abstain  2,132



16



---

PART II. OTHER INFORMATION



Item 6.    Exhibits and Reports on Form 8-K



|      | 
|----- | 
|(a)   | 
|      | 
|4.1*  | 
|      | 
|10.1* | 
|      | 
|10.2  | 
|      | 
|10.3* | 
|      | 
|99.1* | 
|      | 
|99.2* | 
|      | 
|(b)   | 
|      | 
|      | 



* Filed herewith



SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.



|      |  | HOOKER FURNITURE CORPORATION
|----- |  | ----------------------------
|      |  |                             
|Date: |  | July 7, 2003                
|      |  |                             



17



---

Form 10-Q for the Quarterly Period Ended May 31, 2003



CERTIFICATION



I, Paul B. Toms, Jr., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Hooker Furniture Corporation;
|-- |  | -----------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|      |  |             
|----- |  | ------------
|      |  |             
|Date: |  | July 7, 2003
|      |  |             





18



---

Form 10-Q for the Quarterly Period Ended May 31, 2003



CERTIFICATION



I, E. Larry Ryder, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Hooker Furniture Corporation;
|-- |  | -----------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|      |  |             
|----- |  | ------------
|      |  |             
|Date: |  | July 7, 2003
|      |  |             



19



---

EXHIBIT INDEX



|Exhibit |  | Description                                                                                                                                                   
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | 
|4.1*    |  | Credit Agreement, dated April 30, 2003, between Bank of America, N.A., and the Company                                                                        
|        | 
|10.1*   |  | Amendment Number 1, dated March 20, 2003, to the sublease between Pulaski Furniture Corporation and the Company                                               
|        | 
|10.2    |  | Credit Agreement, dated April 30, 2003, between Bank of America, N.A., and the Company (see Exhibit 4.1 above)                                                
|        | 
|10.3*   |  | Letter Agreement, dated April 30, 2003, between Branch Banking and Trust Company of Virginia and the Company                                                  
|        | 
|99.1*   |  | Certification of the Companys Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|        | 
|99.2*   |  | Certification of the Companys Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002



* Filed herewith



EI-1