UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION





Washington,
D.C.  20549





Form
10-Q





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





For the
quarterly period ended May 3,
2009





Commission
file number 000-25349





HOOKER
FURNITURE CORPORATION


(Exact
name of registrant as specified in its charter)





Virginia
            54-0251350(State
      or other jurisdiction of 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 o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such
files).      Yes o  No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated Filer  ̈
            
            Accelerated filer xNon-accelerated Filer  ̈ (Do not check if a smaller reporting company)
            
            Smaller reporting company  ̈





Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).


Yes o No x





Indicate
the number of shares outstanding of each of the issuer’s classes of common stock
as ofJune 12,
2009





Common
      stock, no par value
            10,771,912(Class
      of common stock)
            (Number
      of shares)










PART
I.  FINANCIAL INFORMATION





Item
1.  Financial Statements





HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands, including share data)


(Unaudited)





May
      3,
                      
                      
                      February
      1,2009
                      
                      
                      2009AssetsCurrent
      assetsCash
      and cash equivalents
                      
                      $
                      26,205
                      
                      
                      $
                      11,804Trade
      accounts receivable, less allowance for doubtful accountsof $1,917
      and $2,207 on each date
                      
                      
                      25,557
                      
                      
                      
                      30,261Inventories
                      
                      
                      47,139
                      
                      
                      
                      60,248Income
      tax recoverable
                      
                      
                      397
                      
                      
                      
                      186Prepaid
      expenses and other current assets
                      
                      
                      3,718
                      
                      
                      
                      4,550Total
      current assets
                      
                      
                      103,016
                      
                      
                      
                      107,049Property,
      plant and equipment, net
                      
                      
                      24,478
                      
                      
                      
                      24,596Intangible
      assets
                      
                      
                      4,123
                      
                      
                      
                      4,805Cash
      surrender value of life insurance policies
                      
                      
                      14,059
                      
                      
                      
                      13,513Other
      assets
                      
                      
                      3,703
                      
                      
                      
                      3,504Total
      assets
                      
                      $
                      149,379
                      
                      
                      $
                      153,467Liabilities
      and Shareholders’ EquityCurrent
      liabilitiesTrade
      accounts payable
                      
                      $
                      6,612
                      
                      
                      $
                      8,392Accrued
      salaries, wages and benefits
                      
                      
                      2,282
                      
                      
                      
                      2,218Other
      accrued expenses
                      
                      
                      2,974
                      
                      
                      
                      2,279Current
      maturities of long-term debt
                      
                      
                      2,953
                      
                      
                      
                      2,899Total
      current liabilities
                      
                      
                      14,821
                      
                      
                      
                      15,788Long-term
      debt, excluding current maturities
                      
                      
                      1,560
                      
                      
                      
                      2,319Deferred
      compensation
                      
                      
                      5,852
                      
                      
                      
                      5,606Other
      long-term liabilities
                      
                      
                      34
                      
                      
                      
                      44Total
      liabilities
                      
                      
                      22,267
                      
                      
                      
                      23,757Shareholders’
      equityCommon
      stock, no par value, 20,000
      shares authorized,10,772shares
      issued and outstanding on each date
                      
                      
                      17,015
                      
                      
                      
                      16,995Retained
      earnings
                      
                      
                      109,840
                      
                      
                      
                      112,450Accumulated
      other comprehensive income
                      
                      
                      257
                      
                      
                      
                      265Total
      shareholders’ equity
                      
                      
                      127,112
                      
                      
                      
                      129,710Total
      liabilities and shareholders’ equity
                      
                      $
                      149,379
                      
                      
                      $
                      153,467





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





2




HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(In
thousands, except per share data)


(Unaudited)





Thirteen
      Weeks EndedMay
      3
                    
                    
                    May
      4,2009
                    
                    
                    2008Net
      sales
                    
                    $
                    52,063
                    
                    
                    $
                    71,027Cost
      of sales
                    
                    
                    40,836
                    
                    
                    
                    54,291Gross
      profit
                    
                    
                    11,227
                    
                    
                    
                    16,736Selling
      and administrative expenses
                    
                    
                    11,181
                    
                    
                    
                    12,786Intangible
      asset impairment charge
                    
                    
                    673Operating
      (loss) income
                    
                    
                    (627
                    )
                    
                    
                    3,950Other
      (expense) income, net
                    
                    
                    (3
                    )
                    
                    
                    187(Loss)
      income before income taxes
                    
                    
                    (630
                    )
                    
                    
                    4,137Income
      tax (benefit) expense
                    
                    
                    (174
                    )
                    
                    
                    1,532Net
      (loss) income
                    
                    $
                    (456
                    )
                    
                    $
                    2,605(Loss)
      earnings per share:Basic
                    
                    $
                    (0.04
                    )
                    
                    $
                    0.23Diluted
                    
                    $
                    (0.04
                    )
                    
                    $
                    0.23Weighted
      average shares outstanding:Basic
                    
                    
                    10,752
                    
                    
                    
                    11,533Diluted
                    
                    
                    10,757
                    
                    
                    
                    11,539Cash
      dividends declared per share
                    
                    $
                    0.10
                    
                    
                    $
                    0.10





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





3





HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(In
thousands)


(Unaudited)




Thirteen
      Weeks EndedMay
      3,
                      
                      
                      May
      4,2009
                      
                      
                      2008Cash
      flows from operating activitiesCash
      received from customers.
                      
                      $
                      56,838
                      
                      
                      $
                      74,776Cash
      paid to suppliers and employees
                      
                      
                      (39,872
                      )
                      
                      
                      (64,232
                      )Income
      taxes paid, net
                      
                      
                      (156
                      )
                      
                      
                      (2,061
                      )Interest
      (paid) received, net
                      
                      
                      (128
                      )
                      
                      
                      161Net
      cash provided by operating activities
                      
                      
                      16,682
                      
                      
                      
                      8,644Cash
      flows from investing activitiesPurchase
      of property, plant and equipment
                      
                      
                      (602
                      )
                      
                      
                      (473
                      )Proceeds
      received on the sale of property and equipment
                      
                      
                      9Premiums
      paid on life insurance policies
                      
                      
                      (280
                      )
                      
                      
                      (283
                      )Proceeds
      received on life insurance policies
                      
                      
                      374
                      
                      
                      
                      357Net
      cash used in investing activities
                      
                      
                      (499
                      )
                      
                      
                      (399
                      )Cash
      flows from financing activitiesPurchases
      and retirement of common stock
                      
                      
                      
                      
                      
                      
                      (856
                      )Cash
      dividends paid
                      
                      
                      (1,077
                      )
                      
                      
                      (1,156
                      )Payments
      on long-term debt
                      
                      
                      (705
                      )
                      
                      
                      (655
                      )Net
      cash used in financing activities
                      
                      
                      (1,782
                      )
                      
                      
                      (2,667
                      )Net
      increase in cash and cash equivalents
                      
                      
                      14,401
                      
                      
                      
                      5,578Cash
      and cash equivalents at beginning of period
                      
                      
                      11,804
                      
                      
                      
                      33,076Cash
      and cash equivalents at end of period
                      
                      $
                      26,205
                      
                      
                      $
                      38,654Reconciliation
      of net income to net cash providedby operating
    activitiesNet
      (loss) income
                      
                      $
                      (456
                      )
                      
                      $
                      2,605Depreciation
      and amortization
                      
                      
                      730
                      
                      
                      
                      574Non-cash
      restricted stock awards and performance grants
                      
                      
                      20
                      
                      
                      
                      148Provision
      for doubtful accounts
                      
                      
                      183
                      
                      
                      
                      96Deferred
      income tax (benefit) expense
                      
                      
                      (141
                      )
                      
                      
                      187Asset
      impairment charge
                      
                      
                      673Changes
      in assets and liabilities:Trade
      accounts receivable
                      
                      
                      4,521
                      
                      
                      
                      3,584Inventories
                      
                      
                      13,109
                      
                      
                      
                      4,405Prepaid
      expenses and other assets
                      
                      
                      (83
                      )
                      
                      
                      (465
                      )Trade
      accounts payable
                      
                      
                      (1,780
                      )
                      
                      
                      (532
                      )Accrued
      salaries, wages and benefits
                      
                      
                      64
                      
                      
                      
                      (1,125
                      )Accrued
      income taxes
                      
                      
                      
                      
                      
                      
                      (716
                      )Other
      accrued expenses
                      
                      
                      (382
                      )
                      
                      
                      (442
                      )Deferred
      compensation
                      
                      
                      192
                      
                      
                      
                      325Other
      long-term liabilities
                      
                      
                      32Net
      cash provided by operating activities
                      
                      $
                      16,682
                      
                      
                      $
                      8,644





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




4




HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


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


(Unaudited)


For the
Thirteen Weeks Ended May 3, 2009





1.
            Preparation of Interim
      Financial Statements





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 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 audited condensed
consolidated financial statements and accompanying notes included in our annual
report on Form 10-K for the fiscal year ended February 1, 2009.





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” or “quarterly period”) that
began February 2, 2009 and ended on May 3, 2009.  These financial
statements also include the thirteen-week period that began February 4, 2008 and
ended on May 4, 2008.





References
to the 2010 fiscal year and comparable terminology in the notes to the
consolidated financial statements mean the fiscal year that began February 2,
2009 and will end January 31, 2010.  References to the 2009 fiscal
year and comparable terminology in the notes to the consolidated financial
statements mean the fiscal year that began February 4, 2008 and ended February
1, 2009.





We made a
change in accounting principle in fiscal 2009 to classify shipping and
warehousing costs associated with the distribution of finished products to our
customers, as well as certain supply chain and operations management
expenses,  as cost of sales (previously recorded in selling, general
and administrative expense).  We believe this accounting principle is
preferable because the classification of these shipping and warehousing costs in
cost of sales better reflects the cost of producing, selling and distributing
our products.  The reclassification due to this change in accounting
principle amounted to $4.6 million for the 2009 first quarter.








2.
            Inventories




May
      3,
                  
                  
                  February
      1,2009
                  
                  
                  2009Finished
      furniture
                  
                  $
                  52,405
                  
                  
                  $
                  64,865Furniture
      in process
                  
                  
                  836
                  
                  
                  
                  900Materials
      and supplies
                  
                  
                  7,412
                  
                  
                  
                  8,207Inventories
      at FIFO
                  
                  
                  60,653
                  
                  
                  
                  73,972Reduction
      to LIFO basis
                  
                  
                  13,514
                  
                  
                  
                  13,724Inventories
                  
                  $
                  47,139
                  
                  
                  $
                  60,248





5





3.
            Property, Plant and
      Equipment




May
      3,
                    
                    
                    February
      1,2009
                    
                    
                    2009Buildings
      and land improvements
                    
                    $
                    23,676
                    
                    
                    $
                    23,676Machinery
      and equipment
                    
                    
                    3,690
                    
                    
                    
                    3,665Furniture
      and fixtures
                    
                    
                    27,189
                    
                    
                    
                    26,656Other
                    
                    
                    3,887
                    
                    
                    
                    3,886Total
      depreciable property at cost
                    
                    
                    58,442
                    
                    
                    
                    57,883Less
      accumulated depreciation
                    
                    
                    36,279
                    
                    
                    
                    35,695Total
      depreciable property, net
                    
                    
                    22,163
                    
                    
                    
                    22,188Land
                    
                    
                    1,357
                    
                    
                    
                    1,357Construction
      in progress
                    
                    
                    958
                    
                    
                    
                    1,051Property,
      plant and equipment, net
                    
                    $
                    24,478
                    
                    
                    $
                    24,596





4.          Intangible Assets




May
      3,
                  
                  
                  February
      1,2009
                  
                  
                  2009Non-amortizable
      Intangible AssetsTrademarks
      and trade names – Bradington-Young
                  
                  $
                  2,616
                  
                  
                  $
                  3,289Trademarks
      and trade names – Sam Moore
                  
                  
                  396
                  
                  
                  
                  396Trademarks
      and trade names – Opus Designs
                  
                  
                  1,057
                  
                  
                  
                  1,057Total
      trademarks and trade names
                  
                  
                  4,069
                  
                  
                  
                  4,742Amortizable
      Intangible AssetsNon-compete
      agreements
                  
                  
                  700
                  
                  
                  
                  700Furniture
      designs
                  
                  
                  100
                  
                  
                  
                  100Total
      amortizable intangible assets
                  
                  
                  800
                  
                  
                  
                  800Less
      accumulated amortization
                  
                  
                  746
                  
                  
                  
                  737Net
      carrying value
                  
                  
                  54
                  
                  
                  
                  63Intangible
      assets
                  
                  $
                  4,123
                  
                  
                  $
                  4,805





During
the 2010 first quarter, the continuing economic recession has resulted in
steepening year-over-year declines in net sales for each of our
businesses.  In evaluating the carrying value of our trade names using
the relief from royalty method, we determined that the Bradington-Young trade
name was further impaired compared to the adjusted carrying value we recorded
for that trade name as of February 1, 2009.  As a result we recorded
an additional intangible asset impairment charge of $673,000 during the 2010
first quarter.





6





5.           Other Comprehensive
Income




Thirteen
      Weeks EndedMay
      3,
                          
                          
                          May
      4,2009
                          
                          
                          2008Net
      (loss) income
                          
                          $
                          (456
                          )
                          
                          $
                          2,605(Loss)
      gain on interest rate swaps
                          
                          
                          (19
                          )
                          
                          
                          2Portion
      of swap agreement’s fair value reclassified tointerest
      expense
                          
                          
                          62
                          
                          
                          
                          46Unrealized
      gain on interest rate swaps
                          
                          
                          43
                          
                          
                          
                          48Portion
      of accumulated actuarial gain on Supplemental RetirementIncome
      Plan reclassified to deferred compensation expense
                          
                          
                          (55
                          )Other
      comprehensive (loss) income before tax
                          
                          
                          (12
                          )
                          
                          
                          48Income
      tax benefit (expense)
                          
                          
                          4
                          
                          
                          
                          (18
                          )Other
      comprehensive (loss) income, net of tax
                          
                          
                          (8
                          )
                          
                          
                          30Comprehensive
      (loss) income
                          
                          $
                          (464
                          )
                          
                          $
                          2,635





6.           Accounting
Pronouncements




In
December 2007, the FASB issued a revision to SFAS No. 141R, “Business
Combinations.”  The objective of this Statement is to improve the
relevance, representational faithfulness, and comparability of the information
that a reporting entity provides in its financial reports about a business
combination and its effects. To accomplish that, this statement establishes
principles and requirements for how the acquirer:  a) recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the
acquiree;  b) recognizes and measures the goodwill acquired in the
business combination or a gain from a bargain purchase; and c) determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination.  This
statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008.  Early adoption of
this standard is not permitted.  Consequently, we adopted the standard
in our fiscal year 2010 first quarter, which began February 2,
2009.  The adoption of SFAS 141R did not have an impact on our
financial position or results of operations.




In March
2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standard (“SFAS”) No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133.”  The objective of this statement is to require enhanced
disclosures about an entity’s derivative and hedging activities and to improve
the transparency of financial reporting.  This statement changes the
disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash
flows.   This statement is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008.
This statement encourages, but does not require, comparative disclosures for
earlier periods at initial adoption.  Consequently, we adopted this
standard effective with our fiscal year 2010 first quarter, which began February
2, 2009.  The adoption of SFAS No. 161 did not have a material impact
on our financial position or results of operations.




On April
9, 2009 the FASB issued FASB Staff Position (“FSP”) FAS 107-1 and Accounting
Principles Board (“APB”) 28-1, “Interim Disclosures about Fair Value of
Financial Instruments”. This statement requires disclosures about the fair value
of financial instruments for annual and interim reporting periods of publicly
traded companies. This FSP also amends APB Opinion No. 28, Interim Financial
Reporting, to require those disclosures in summarized financial information at
interim reporting periods. FSP FAS 107-1 and APB 28-1 is effective for interim
reporting periods ending after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. An entity may early adopt this FSP only if
it also elects to early adopt FSP FAS 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly, and FSP FAS 115-2
and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments.
This FSP does not require disclosures for earlier periods presented for
comparative purposes at initial adoption. In periods after initial adoption,
this FSP requires comparative disclosures only for periods ending after initial
adoption. We expect to adopt this standard during our fiscal 2010 second
quarter, which began on May 4, 2009. The adoption of this standard is not
expected to have a material impact on our financial position or results of
operations.




7




On April
9, 2009 the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly.” FSP FAS 157-4 provides
additional guidance for estimating fair value in accordance with Statement No.
157, Fair Value Measurements, when the volume and level of activity for the
asset or liability have significantly decreased and provides additional guidance
on the Statement No. 157 disclosure requirements. This FSP also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. FSP FAS 157-4 is effective for interim and annual reporting periods
ending after June 15, 2009, and should be applied prospectively. Early adoption
is permitted for periods ending after March 15, 2009. Earlier adoption for
periods ending before March 15, 2009 is not permitted. If a reporting entity
elects to adopt early FSP FAS 115-2 and FAS 124-2, Recognition and Presentation
of Other-Than-Temporary Impairments, or FSP FAS 107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments, the reporting entity also
is required to adopt early this FSP.  Additionally, if the reporting
entity elects to adopt early this FSP, FSP FAS 115-2 and FAS 124-2 also must be
adopted early.  This FSP does not require disclosures for earlier
periods presented for comparative purposes at initial adoption. In periods after
initial adoption, this FSP requires comparative disclosures only for periods
ending after initial adoption. We expect to adopt this standard during our
fiscal 2010 second quarter. The adoption of this standard is not expected to
have a material impact on our financial position or results of
operations.




7.           Supplier
Commitments





In fiscal
year 2009 we advanced payments to one of our finished goods suppliers against
our purchase orders placed with that supplier.  The purpose of the
advances was to facilitate the supplier’s purchase of raw materials in order to
ensure timely delivery of furniture shipments to us.  The current
balance of the advances is approximately $1,000.  We also assisted the
supplier in obtaining additional bank financing by issuing a standby letter of
credit in the amount of $600,000, which expires in July 2009, as security for
that financing.  In conjunction with the issuance of the letter of credit,
we entered into a security agreement with the supplier, which provides us with a
security interest in certain assets of the supplier and its
shareholders.  Our maximum exposure under the advances and the standby
letter of credit as of May 3, 2009 is approximately $601,000, which we believe
to be adequately secured under this arrangement.





8.           Earnings Per
Share





Basic
earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
period.  Diluted earnings per share reflects the potential dilutive
effect of securities that could share in our earnings.  Restricted
shares awarded to non-employee members of the board of directors that have not
yet vested are considered when computing diluted earnings per
share.  As of May 3, 2009, there were approximately twenty thousand
shares of non-vested restricted stock outstanding.





8





Thirteen
      Weeks EndedMay
      3,
                        
                        
                        May
      4,2009
                        
                        
                        2008Net
      (loss) income
                        
                        $
                        (456
                        )
                        
                        $
                        2,605Weighted
      average shares outstanding for basicearnings per
      share
                        
                        
                        10,752
                        
                        
                        
                        11,533Dilutive
      effect of non-vested restricted stock awards
                        
                        
                        5
                        
                        
                        
                        6Weighted
      average shares outstanding for dilutedearnings per
      share
                        
                        
                        10,757
                        
                        
                        
                        11,539Basic
      (loss) earnings per share
                        
                        $
                        (0.04
                        )
                        
                        $
                        0.23Diluted
      (loss) earnings per share
                        
                        $
                        (0.04
                        )
                        
                        $
                        0.23





9.           Share-Based
Compensation





The
Hooker Furniture Corporation 2005 Stock Incentive Plan permits incentive awards
of restricted stock, restricted stock units, stock appreciation rights and
performance grants to key employees and non-employee directors.  We
have issued annual restricted stock awards to each non-employee member of the
board of directors since January 2006.  These shares will vest if the
director remains on the board through a 36-month service period or may vest
earlier in accordance with terms specified in the plan. We account for these
awards as “non-vested equity shares.”  For each restricted common
stock issuance, the following table summarizes the actual number of shares that
have been issued/vested/forfeited, the weighted average issue price of those
shares on the grant date, the fair value of each grant on the grant date,
compensation expense recognized for the non-vested shares of each grant and the
remaining fair value of the non-vested shares of each grant as of May 3,
2009:





Whole
                          
                          
                          Grant-Date
                          
                          
                          Aggregate
                          
                          
                          Compensation
                          
                          
                          Grant-Date Fair ValueNumber of
                          
                          
                          Fair Value
                          
                          
                          Grant-Date
                          
                          
                          Expense
                          
                          
                          Unrecognized AtShares
                          
                          
                          Per Share
                          
                          
                          Fair Value
                          
                          
                          Recognized
                          
                          
                          May 3, 2009Shared Issued
      on January 16, 2006Issued
                          
                          
                          4,851
                          
                          
                          $
                          15.31
                          
                          
                          $
                          74Forfeited
                          
                          
                          (784
                          )
                          
                          
                          15.31
                          
                          
                          
                          (12
                          )Vested
                          
                          
                          (4,067
                          )
                          
                          
                          15.31
                          
                          
                          
                          (62
                          )
                          
                          $
                          6262Shares
      Issued on January 15, 2007Issued
                          
                          
                          4,875
                          
                          
                          $
                          15.23
                          
                          
                          
                          74
                          
                          
                          
                          58
                          
                          
                          $
                          16Shares
      Issued on January 15, 2008Issued
                          
                          
                          4,335
                          
                          
                          $
                          19.61
                          
                          
                          
                          85
                          
                          
                          
                          38
                          
                          
                          
                          47Shares
      Issued on January 15, 2009Issued
                          
                          
                          10,474
                          
                          
                          $
                          8.12
                          
                          
                          
                          85
                          
                          
                          
                          9
                          
                          
                          
                          76Awards
      outstanding at May 3,
      2009:
                          
                          
                          19,684
                          
                          
                          
                          
                          
                          
                          $
                          244
                          
                          
                          $
                          167
                          
                          
                          $
                          139





10.           Interest Rate Swaps (Derivative
Financial Instruments)





We may
enter into swap agreements to hedge against the potential impact of increases in
interest rates on our debt instruments.  By using swap agreements to hedge
exposures to changes in interest rates, we expose ourselves to credit risk and
market risk.  Credit risk is the failure of the counterparty to
perform under the terms of the swap agreement.  We attempt to minimize
this credit risk by entering into transactions with high-quality
counterparties.  Market risk is the adverse effect on the value of the
swap agreement that results from a change in interest rates.  The
market risk associated with interest-rate contracts is managed by establishing
and monitoring parameters that limit the types and degree of market risk that
may be undertaken.





9


We are
party to an interest rate swap agreement that in effect provides for a fixed
interest rate of 4.1% through 2010 on our term loan.  In addition in
2003, we terminated a similar swap agreement, which in effect provided a fixed
interest rate of approximately 7.4% on that term loan.  We made a $3.0
million payment to terminate that former swap agreement, which is being
amortized over the remaining repayment period of the loan, resulting in an
effective fixed interest rate of approximately 7.4% on the term
loan.  We account for our interest rate swap agreements as a cash flow
hedges and recognize the fair value of our existing agreement and the
unamortized portion of the termination payment on the balance sheet in
shareholders’ equity under the caption “accumulated other comprehensive
income”.  The related gains or losses on these instruments are
recorded through comprehensive income and accordingly are included in
accumulated other comprehensive income on the balance sheet until recognized in
net income. The gains or losses on these transactions are recognized in net
income in the periods in which interest expense on our term note (the related
hedged item) is recognized in net income.





The
aggregate fair market value of our interest rate swap agreements decreases when
interest rates decline and increases when interest rates
rise.  Overall, interest rates have declined since the inception of
our swap agreements.  The aggregate decrease in the fair market value
of the effective portion of the existing agreement and the unamortized balance
of the termination payment of $116,000 ($187,000 pretax) as of May 3, 2009 and
$142,000 ($229,000 pretax) as of February 1, 2009 is reflected under the caption
“accumulated other comprehensive income” in the condensed consolidated balance
sheets.  Substantially all of the aggregate pre-tax decrease in fair
market value of the agreement is expected to be reclassified into interest
expense during the next twelve months.





At May 3,
2009 we were party to one derivative financial instrument, as described in the
following table:





FixedNotional
                      
                      
                      InterestAgreement
                      
                      Amount
                      
                      
                      Rate
                      
                      
                      Expiration Date
                      
                      Fair ValueInterest
      rate swap
                      
                      $
                      4,513
                      
                      
                      
                      3.09
                      %
                      
                      September
      1, 2010
                      
                      $
                      (98
                      )





Fair Value Disclosure of
Derivative Instruments





In
accordance with SFAS No. 157, “Fair Value Measurements” (SFAS No. 157) and SFAS
No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (SFAS
No. 161), on a combined basis, the following table represents the required
quantitative disclosures at May 3, 2009.




Fair Value as of May 3, 2009Carrying Value and
                                                                                              Quoted Prices in
                                                                                              SignificantBalance Sheet Location
                                                                                              Active Markets
                                                                                              Other
                                                                                              SignificantAs of May 3, 2009
                                                                                              for Identical
                                                                                              Observable
                                                                                              UnobservableOther Accrued
                                                                                              Other Long
                                                                                              Instruments
                                                                                              Inputs
                                                                                              InputsExpenses
                                                                                              Term Liabilities
                                                                                              (Level 1)
                                                                                              (Level 2)
                                                                                              (Level 3)Swap
      designated as cashflow
      hedging instrument:Interest
      rate swap
                                                                                              $   (80)
                                                                                              $  (18)
                                                                                              
                                                                                              $ (98)





Thirteen
      Weeks EndedMay
      3,
                  
                  
                  May
      4,2009
                  
                  
                  2008Swap designated as cash flow hedging
      instrument:(Loss)
      gain recognized in other comprehensive income
                  
                  
                  (19
                  )
                  
                  
                  2(Loss)
      reclassified from AOCI into interest expense, net
                  
                  
                  62
                  
                  
                  
                  46





10





Item
2.     Management’s Discussion and Analysis of
Financial Condition and Results of Operations





This
quarterly report on Form 10-Q includes our unaudited condensed consolidated
financial statements for the thirteen week (also referred to as “three months,”
“three-month period,” “quarter” or “quarterly period”) period ended May 3,
2009.  This report discusses our results of operations for the period
compared to the fiscal year 2009 thirteen-week first quarter that ended May 4,
2008 and our financial condition as of May 3, 2009.  References in
this report to the 2010 fiscal year or comparable terminology refer to the
fiscal year that began February 2, 2009 and will end January 31,
2010.





In the fiscal year 2009 fourth quarter
we reclassified shipping and warehousing costs from selling and administrative
expenses to cost of sales in our condensed consolidated financial statements and
accompanying notes.  Accordingly, these costs have also been
reclassified for prior periods to conform to the new method of
presentation.  We reclassified $4.6 million for the 2009 first
quarter.





Overview





We have
seen a growing consumer preference for lower-priced, high-quality imported
furniture products since 2001.  Led by the change in consumer demand,
from 2003 to 2008 we systematically increased our focus on high-quality imported
home furnishings with a coordinated exit from domestic wood furniture
manufacturing.  We closed our last domestic wood manufacturing plant
during the fiscal year 2008 first quarter and completed the sale of all
manufacturing assets no longer needed in the business in December
2007.  As a result, we have replaced a domestic operating model for
wood furniture, which had high overhead and high fixed costs, with a low
overhead, variable cost import model. We are now focused on imported wood and
metal furniture, as well as both domestically produced and imported upholstered
home furnishings.  Maintaining domestic upholstered furniture
manufacturing allows us to offer four to six week turnaround on orders for
custom leather and fabric upholstered seating and remains an important part of
our strategy.





Since the
fall of 2006, our business has been impacted by low levels of consumer
confidence and a weakening housing market.  By late 2008, this
malaise, exacerbated by weak credit markets, had spread to the broader U.S.
economy.  As a result, the residential home furnishings industry has
seen an unprecedented decline in demand for its products.  Steepening
year-over-year declines in net sales have continued through the fiscal year 2010
first quarter.





Results
of operations for the thirteen-week first quarter ended May 3, 2009 reflect the
continuing deterioration in the retail environment for home furnishings.
Discretionary purchases of furniture, particularly at the upper-middle price
points where we compete, have been highly affected by consumer
confidence.  Current economic factors, such as rising unemployment,
high energy and food costs and a difficult housing and mortgage market, have
resulted in a weak retail environment.  We believe however, that our
business model provides us with the flexibility necessary to adjust to changing
market conditions by controlling inventory purchases from suppliers. We also
believe that the current economic downturn is temporary and upon economic
recovery, we will be well positioned to respond quickly to increased
demand.





Following
are the principal factors that impacted the Company’s results of operations
during the quarterly period ended May 3, 2009:





·
            Net
      sales declined by $19.0 million, or 26.7%, to $52.1 million during the
      fiscal year 2010 first quarter compared to net sales of $71.0 million
      during the fiscal year 2009 first quarter.  This decline
      reflects the continuing year-over-year declines in incoming order rates we
      have experienced in all operating units since the fiscal 2006 third
      quarter, resulting from the industry-wide slow down in business at
      retail.


·
              Operating
      loss for the fiscal year 2010 first quarter was $627,000, or 1.2% of net
      sales, compared to operating income of $4.0 million, or 5.6% of net sales,
      in the fiscal 2009 first quarter principally due to lower net sales,
      higher fixed operating and domestic upholstery overhead costs as a percent
      of net sales, as well as an impairment charge of $673,000 for the value of
      the Bradington-Young trade
name.




11





Results
of Operations





The
following table sets forth the percentage relationship to net sales of certain
items included in the condensed consolidated statements of
operations.




Thirteen
      Weeks EndedMay
      3,
                  
                  
                  May
      4,2009
                  
                  
                  2008Net
      sales
                  
                  
                  100.0
                  %
                  
                  
                  100.0
                  %Cost
      of sales
                  
                  
                  78.4
                  
                  
                  
                  76.4Gross
      profit
                  
                  
                  21.6
                  
                  
                  
                  23.6Selling
      and administrative expenses
                  
                  
                  21.5
                  
                  
                  
                  18.0Intangible
      asset impairment charge
                  
                  
                  1.3Operating
      (loss) income
                  
                  
                  (1.2
                  )
                  
                  
                  5.6Other
      (expense) income, net
                  
                  
                  
                  
                  
                  
                  0.3(Loss)
      income before income taxes
                  
                  
                  (1.2
                  )
                  
                  
                  5.8Income
      tax (benefit) expense
                  
                  
                  (0.3
                  )
                  
                  
                  2.2Net
      (loss) income
                  
                  
                  (0.9
                  )
                  
                  
                  3.7





Net sales
for the fiscal year 2010 first quarter declined to $52.1 million compared to
$71.0 million for the fiscal 2009 first quarter, principally due to lower unit
volume attributed to the continued industry-wide slow down in business at
retail.  Almost every product line and category reported lower sales
in the 2010 first quarter compared to the 2009 first quarter, with the exception
of Opus Designs by Hooker youth bedroom and our new Envision product line, which
was recently introduced to address the needs of a younger consumer.





Unit
volume decreased for Hooker imported and domestically produced wood and metal
furniture, Bradington-Young domestic and imported leather upholstered furniture
and Sam Moore domestic and imported upholstered furniture compared to the fiscal
2009 first quarter. Sales of imported wood and metal furniture and upholstery
declined approximately 25% from the prior year quarter, while domestic
upholstery sales declined approximately 30% in the same period.





Overall,
average selling prices increased during the fiscal year 2010 first quarter
compared to the fiscal year 2009 first quarter primarily due to selling price
increases implemented during fiscal year 2009 in reaction to cost increases for
imported finished goods and raw materials.  Imported wood and metal
furniture average selling prices increased as a result of price increases
partially offset by higher discounting, while selling prices of imported
upholstery declined slightly due to heavier discounting and the mix of products
shipped.  Domestic leather upholstered furniture average selling
prices increased slightly principally due to an overall increase in per unit
pricing, however overall domestic upholstery prices declined due to the mix of
leather and fabric products shipped.  The modest decline in imported
leather upholstery prices was due to the mix of products shipped and higher
discounting on slower-moving products.





Overall,
gross profit margin decreased to 21.6% of net sales in the fiscal year 2010
first quarter compared to 23.6% in the fiscal 2009 first quarter, mainly as a
result of higher fixed overhead as a percentage of net sales due to
significantly lower unit volume for domestically produced upholstered
products.  Whilegross
margins for wood and metal furniture improved slightly in the fiscal year 2010
first quarter compared to the fiscal 2009 first quarter, margins for upholstered
furniture declined.





Selling
and administrative expenses decreased to $11.2 million, or 21.5% of net sales
for the fiscal year 2010 first quarter, compared to $12.8 million, or 18.0% of
net sales for the fiscal year 2009 first quarter.  The decrease in
spending was principally due to lower selling expenses attributed to lower sales
volume as well as to certain cost reduction initiatives undertaken in response
to lower sales volume, partially offset by a higher provision for bad debts.
Selling and administrative expenses increased as a percentage of net sales, from
18.0% for the fiscal year 2009 first quarter to 21.5% for the fiscal year 2010
first quarter due to lower net sales.





12




In
evaluating the carrying value of our trade names using the relief from royalty
method, we determined that the Bradington-Young trade name was further impaired
compared to the adjusted carrying value we recorded for that trade name as of
February 1, 2009.  As a result we recorded an additional intangible
asset impairment charge of $673,000 ($419,000 or $0.04 per share, after tax)
during the 2010 first quarter.





Excluding
the effect of the intangible asset impairment charge, operating profitability
for the fiscal 2010 first quarter still declined year over year compared to the
fiscal 2009 first quarter, primarily as a result of lower gross profit margins
and higher fixed costs as a percent of sales due to lower sales
volumes.  The following table reconciles operating income as a
percentage of net sales ("operating margin") to operating margin excluding this
charge as a percentage of net sales for each period:




Thirteen
      Weeks EndedMay
      3,
                        
                        
                        May
      4,2009
                        
                        
                        2008Operating
      margin, including asset impairment charge
                        
                        
                        (1.2
                        )%
                        
                        
                        5.6
                        %Intangible
      asset impairment charge
                        
                        
                        1.3Operating
      margin, excluding asset impairment charge
                        
                        
                        0.1
                        %
                        
                        
                        5.6
                        %





The
operating margin excluding the impact of the asset impairment charge is a
“non-GAAP” financial measure.  We provide this information because we
believe it is useful to investors in evaluating our ongoing
operations.  Non-GAAP financial measures are intended to provide
insight into selected financial information and should be evaluated in the
context in which they are presented.  These measures are of limited
usefulness in evaluating  our overall financial results presented in
accordance with GAAP and should be considered in conjunction with the
consolidated condensed financial statements, including the related notes
included elsewhere in this report.





As a
result of the above, we realized an operating loss for the fiscal year 2010
first quarter of $627,000, or 1.2% of net sales, compared to operating income of
$4.0 million, or 5.6% of net sales in the fiscal year 2009 first
quarter.





Other
(expense) income, net amounted to a $3,000 loss for the fiscal year 2010 first
quarter compared to income of $187,000 for the fiscal year 2009 first
quarter.  This decline was the result of a decrease in interest
income, due to lower cash and cash equivalent balances and lower rates of return
earned on those balances in the fiscal year 2010 first quarter.





We
recorded an income tax benefit of $174,000 for the fiscal year 2010 first
quarter and $1.5 million expense for the fiscal year 2009 first quarter. Our
effective tax rate decreased to 27.6% for the fiscal year 2010 first
quarter from 37.0% during the fiscal year 2009 first quarter.  The
effective rate decreased in the fiscal year 2010 first quarter principally due
to an increase in the non-taxable cash surrender value growth of our life
insurance policies and non-cash charitable contributions of appreciated finished
goods inventory as a percentage of pretax income, although the dollar amount of
these items remained relatively stable year-over-year.





Fiscal
year 2010 first quarter net loss was $456,000, or $0.04 per share, compared to
net income of $2.6 million, or $0.23 per share, in the fiscal year 2009 first
quarter.





Outlook





The year
over year declines in quarterly incoming orders, which began in the Fall of
2006, continued during the fiscal year 2010 first quarter.  We expect
that retail conditions will continue to be sluggish for the second quarter of
the fiscal year but we expect to see the typical improvement in business during
the second half of 2010.  However, general economic conditions will
continue to have an impact on our performance.  We are taking the
following actions to address near term challenges to our
profitability:





·
            deferring,
      reducing or eliminating certain spending
plans;


·
            continuing
      to refine the management of our supply chain, warehousing and distribution
      operations; and


·
            also
      continuing to reduce our inventory levels to reflect current business
      conditions and lower sales volumes.




13


Our
domestic upholstery manufacturing operations have been particularly impacted by
the prolonged sales downturn due to higher fixed overhead costs as a percentage
of our reduced net sales.  To mitigate the impact of these sales
declines we are:





·
            pursuing
      additional distribution channels and offering an array of new products and
      designs that we believe will generate additional sales
    growth;


·
            taking
      actions to streamline our domestic  upholstery operating
      organization and reduce operating expenses at our Sam Moore Furniture
      operations; and,


·
            continuing to evaluate our
      manufacturing capacity utilization, work schedules and operating costs to
      better match costs to current sales volume
  levels.





Financial Condition, Liquidity and
Capital Resources





Balance Sheet and Working
Capital





As of May
3, 2009, assets totaled $149.4 million, decreasing from $153.5 million at
February 1, 2009, principally due to decreases in inventories, accounts
receivable, prepaid expenses and other current assets, and intangible
assets,  partially offset by increases in cash and cash equivalents
and cash surrender value of life insurance policies.  Shareholders’
equity at May 3, 2009 decreased slightly to $127.1 million, compared to $129.7
million at February 1, 2009, due to the net loss for the quarter and dividends
paid or accrued.  Long-term debt, including current maturities,
decreased to $4.5 million at May 3, 2009 from $5.2 million at February 1, 2009,
as a result of a scheduled debt repayment.





Working
capital decreased by $3.1 million, or 3.4%, to $88.2 million as of May 3, 2009,
from $91.3 million at the end of fiscal 2009, as a result of a $4.0 million
decrease in current assets, partially offset by a $1.0 million decline in
current liabilities.  Our working capital ratio (the relationship
between our current assets and current liabilities) was 7:1 at May 3,
2009.





The
decrease in current assets is principally due to decreases of $13.1 million in
inventories, $4.7 million in accounts receivable and $832,000 in prepaid
expenses and other current assets, partially offset by an increase of $14.4
million in cash and cash equivalents.  Accounts receivable decreased
primarily due to lower sales.





Inventories
decreased 21.8%, to $47.1 million as of May 3, 2009, from $60.2 million at
February 1, 2009, mainly due to lower imported wood inventories, resulting from
reduced purchases of finished goods inventory in response to lower incoming
order rates.





The
decrease in current liabilities is attributed to decreases of $1.8 million in
accounts payable partially offset by an increase of $695,000 in other accrued
expenses.





Cash Flows – Operating,
Investing and Financing Activities





During
the three months ended May 3, 2009, cash generated from operations ($16.7
million) and proceeds received on certain life insurance policies ($374,000)
funded an increase in cash and cash equivalents ($14.4 million), payment of cash
dividends ($1.1 million), a scheduled principal payment on long-term debt
($705,000), capital expenditures to maintain and enhance our business operating
systems and facilities ($602,000) and premiums paid on life insurance policies
($280,000).





During
the three months ended May 4, 2008, cash generated from operations ($8.6
million) and proceeds received on certain life insurance policies ($357,000)
funded an increase in cash and cash equivalents ($5.6 million), payment of cash
dividends ($1.2 million), the purchase and retirement of common stock
($856,000), a scheduled principal payment on long-term debt ($655,000), capital
expenditures to maintain and enhance the Company’s business operating systems
and facilities ($473,000) and premiums paid on life insurance policies
($283,000).


14


We used
$499,000 of cash for investing activities during the first three months of
fiscal year 2009 compared to $399,000 during the three-month period ended May 4,
2008.  During the fiscal year 2010 three-month period, we used
$602,000 to purchase property, plant and equipment and paid premiums of $280,000
and received proceeds of $374,000 from company-owned life
insurance.  In the fiscal year 2009 three-month period, we used
$473,000 to purchase property, plant and equipment and paid premiums of $283,000
and received proceeds of $357,000 from company-owned life
insurance.





We used
$1.8 million of cash for financing activities during the first three months of
fiscal year 2010 compared to $2.7 million in the three-month period ended May 4,
2008.  During the first three months of fiscal year 2010, we paid cash
dividends of $1.1 million, and made payments of $705,000 on our term loan.
During the first quarter of fiscal year 2009 we paid cash dividends of $1.2
million, used $856,000 to purchase and retire common stock and made a scheduled
principal repayment of $655,000 on our term loan.





Swap
Agreements





We may
enter into swap agreements to hedge against the potential impact of increases in
interest rates on our debt instruments.  By using swap agreements to hedge
exposures to changes in interest rates, we expose ourselves to credit risk and
market risk.  Credit risk is the failure of the counterparty to
perform under the terms of the swap agreement.  We attempt to minimize
this credit risk by entering into transactions with high-quality
counterparties.  Market risk is the adverse effect on the value of the
swap agreement that results from a change in interest rates.  The
market risk associated with interest-rate contracts is managed by establishing
and monitoring parameters that limit the types and degree of market risk that
may be undertaken.





We are
party to an interest rate swap agreement that in effect provides for a fixed
interest rate of 4.1% through 2010 on our term loan.  In addition in
2003, we terminated a similar swap agreement, which in effect provided a fixed
interest rate of approximately 7.4% on that term loan.  We made a $3.0
million payment to terminate that former swap agreement, which is being
amortized over the remaining repayment period of the loan, resulting in an
effective fixed interest rate of approximately 7.4% on the term
loan.  We account for our interest rate swap agreements as a cash flow
hedges and recognize the fair value of our existing agreement and the
unamortized portion of the termination payment on the balance sheet in
shareholders’ equity under the caption “accumulated other comprehensive
income”.  The related gains or losses on these instruments are
recorded through comprehensive income and accordingly are included in
accumulated other comprehensive income on the balance sheet until recognized in
net income. The gains or losses on these transactions are recognized in net
income in the periods in which interest expense on our term note (the related
hedged item) is recognized in net income.





The
aggregate fair market value of our interest rate swap agreements decreases when
interest rates decline and increases when interest rates
rise.  Overall, interest rates have declined since the inception of
our swap agreements.  The aggregate decrease in the fair market value
of the effective portion of the existing agreement and the unamortized balance
of the termination payment of $116,000 ($187,000 pretax) as of May 3, 2009 and
$142,000 ($229,000 pretax) as of February 1, 2009 is reflected under the caption
“accumulated other comprehensive income” in the condensed consolidated balance
sheets.  The aggregate fair value of the active swap is $98,000 as of
May 3, 2009.  The current portion of the swap is reported as Other
Accrued Expenses on our balance sheet ($80,000) and the non-current portion is
reported as Other Long-Term Liabilities ($18,000).  See “Note 5 –
Other Comprehensive Income” to the condensed consolidated financial statements
included in this report.  Substantially all of the aggregate pre-tax
decrease in fair market value of the agreement is expected to be reclassified
into interest expense during the next twelve months.





Debt Covenant
Compliance





The
credit agreement for our revolving credit facility and outstanding term loan
includes, among other requirements, 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.  We were in compliance with these covenants as of May 3,
2009.


15


Liquidity, Financial
Resources and Capital Expenditures





As of May
3, 2009, we had an aggregate $12.6 million available under our revolving credit
facility to fund working capital needs.  Standby letters of credit in
the aggregate amount of $2.4 million, used to collateralize certain insurance
arrangements and for imported product purchases, were outstanding under our
revolving credit facility as of May 3, 2009.  There were no additional
borrowings outstanding under the revolving credit line on May 3,
2009.  Any principal outstanding under the credit line is due March 1,
2011.





We
believe that we have  the financial resources (including available
cash and cash equivalents, expected cash flow from operations, and lines of
credit) needed to meet business requirements for the foreseeable future,
including capital expenditures, working capital and repayments of outstanding
debt.  Cash flow from operations is highly dependent on incoming order
rates and our operating performance.  We expect to spend an additional
$2.4 to $3.4 million in capital expenditures during the remainder of fiscal year
2010 to maintain and enhance our operating systems and facilities.





During
the three months that ended May 3, 2009, we reduced outstanding long-term debt,
including current maturities by $705,000, through scheduled debt
payments.





Dividends





At its
June 9, 2009 meeting, our board of directors declared a quarterly cash dividend
of $0.10 per share, payable on August 28, 2009 to shareholders of record August
14, 2009.




Accounting
Pronouncements




During
the fiscal year 2010 first quarter, the Company adopted two new accounting
pronouncements, neither of which had a material impact on the Company’s
financial position or results of operations.  See “Note 6 – Accounting
Pronouncements” to the condensed consolidated financial statements.





Forward-Looking
Statements





Certain
statements made in this report, including under  “Item 2 -
Management’s Discussion and Analysis of Financial Condition and Results of
Operations,” are not based on historical facts, but are forward-looking
statements.  These statements reflect our reasonable judgment with
respect to future events and typically can be identified by the use of
forward-looking terminology such as “believes,” “expects,” “projects,”
“intends,” “plans,” “may,” “will,” “should,” “would,” “could”  or
“anticipates,” or the negative thereof, or other variations thereon, or
comparable terminology, or by discussions of
strategy.  Forward-looking statements 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:





·
            current
      economic conditions and instability in the financial and credit markets
      including their potential impact on our (i) sales and operating costs and
      access to financing, (ii) customers and suppliers and their ability to
      obtain financing or generate the cash necessary to conduct their
      business;




·
            general
      economic or business conditions, both domestically and
      internationally;




·
            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 fluctuations in the
      prices of purchased finished goods and transportation and warehousing
      costs;




16


·
            supply,
      transportation and distribution disruptions, particularly those affecting
      imported products;




·
            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 domestic manufacturing operations, including fluctuations
      in capacity utilization and the prices of key raw materials,
      transportation and warehousing costs, domestic labor costs and
      environmental compliance and remediation
costs;




·
            our
      ability to successfully implement our business plan to increase sales and
      improve financial performance;




·
            achieving
      and managing growth and change, and the risks associated with
      acquisitions, restructurings, strategic alliances and international
      operations;




·
            risks
      associated with distribution through 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 declines in consumer confidence and/or
      discretionary income available for furniture purchases and the
      availability of consumer credit;
and




·
            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
products.




Any
forward looking statement that we  make speaks only as of the date of
that statement, and we undertake no obligation to update any forward-looking
statements whether as a result of new information, future events, or
otherwise.




Item
3.  Quantitative and Qualitative Disclosures about Market
Risk





We are
exposed to market risk from changes in interest rates and foreign currency
exchange rates, which could impact our results of operations and financial
condition.  We manage our exposure to these risks through our normal
operating and financing activities and, in some cases, through the use of
interest rate swap agreements with respect to interest rates.





Our
obligations under our revolving line of credit and term loan bear interest at
variable rates.  The outstanding balance under our term loan,
including current maturities, amounted to $4.5 million as of May 3,
2009.  We have entered into an interest rate swap agreement that, in
effect, fixes the rate of interest on our term loan at 4.1% through 2010 (7.4%
when the effect of a previously terminated swap agreement is taken into account
when determining interest expense).  The notional principal value of
the swap agreement is equal to the outstanding principal balance of the term
loan.  A fluctuation in market interest rates of one percentage point
(or 100 basis points) would not have a material impact on our results of
operations or financial condition.  For additional discussion of our
swap agreement see “Swap Agreements” in Management’s Discussion and Analysis in
our annual report on Form 10-K for the year ended February 1, 2009 and in this
quarterly report.





For
imported products, we generally negotiate firm pricing denominated in U.S.
Dollars with our foreign suppliers, for periods typically of six months to one
year.  We accept the exposure to exchange rate movements beyond these
negotiated periods without using derivative financial instruments to manage this
risk.  The majority of our imports are purchased from
China.  The Chinese currency, formerly pegged to the U.S. Dollar, now
floats within a limited range in relation to the U.S. Dollar, resulting in
additional exposure to foreign currency exchange rate fluctuations.





Since we
transact our imported product purchases in U.S. Dollars, a relative decline in
the value of the U.S. Dollar could increase the price we pay for imported
products beyond the negotiated periods. We generally expect to reflect
substantially all of the impact of any price increases from suppliers in the
prices we charge for imported products.  However, these changes could
adversely impact sales volume and profit margin during affected
periods.


17


Item
4.  Controls and Procedures





Evaluation
of Disclosure Controls and Procedures





Our
management, with the participation of our principal executive officer and
principal financial officer, evaluated the effectiveness of our disclosure
controls and procedures as of the end of the fiscal quarter ended May 3,
2009.  Based on this evaluation,  our principal executive
officer and principal financial officer have concluded that our disclosure
controls and procedures are effective to provide reasonable assurance that
information required to be disclosed in the reports that we file or submit 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 provide reasonable assurance that such
information is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission rules and
forms.





Changes
in Internal Controls





There
have been no changes in our internal control over financial reporting during the
quarter ended May 3, 2009, that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.





PART
II.  OTHER INFORMATION





Item
5. Other Information





On June
10, 2009, we entered into a deferred bonus agreement with Sekar Sundararajan,
our Executive Vice President – Operations.  The agreement amends and
restates a deferred bonus arrangement we previously entered with Mr.
Sundararajan on or about February 8, 2008 under an employment offer and an
appendix to that document.  The original arrangement was amended to
include certain claims procedures required under the Employee Retirement Income
Security Act of 1974 and to consolidate the arrangement into one document for
purposes of clarity and convenience.





Under the
agreement, Mr. Sundararajan is credited with a $50,000 bonus for each of fiscal
years 2009, 2010 and 2011.  If Mr. Sundararajan is continuously
employed by us until the end of the next fiscal year, he is entitled to payment
of the entire $50,000.  If his employment is terminated for any reason
before the end of the fiscal year in which a bonus is credited, he is entitled
to receive one-third of that $50,000 bonus.  If his employment is
terminated for any reason during the next fiscal year, he is entitled to receive
two-thirds of that $50,000 bonus.  The portion of each $50,000 bonus
earned by Mr. Sundararajan is payable to him in a single lump sum cash payment
as of the last day of the next fiscal year.





For a
complete description of the terms of Mr. Sundararajan’s deferred bonus
arrangement you may refer to his deferred bonus agreement, which has been filed
as an exhibit to this report.


18


Item
6.  Exhibits





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 (incorporated by reference to Exhibit
      3.2 to the Company’s Form 10-Q (SEC File No. 000-25349) for the quarter
      ended August 31, 2006)





4.1
            Amended
      and Restated Articles of Incorporation of the Company (See Exhibit
      3.1)





4.2
            Amended
      and Restated Bylaws of the Company (See Exhibit
  3.2)





10.1*
            Deferred
      Bonus Agreement for Sekar Sundararajan, dated June 10,
  2009





10.2*
            Employment
      Package for Sekar Sundararajan





31.1*
            Rule
      13a-14(a) Certification of the Company’s principal executive
      officer





31.2*
            Rule
      13a-14(a) Certification of the Company’s principal financial
      officer





32.1*
            Rule
      13a-14(b) Certification of the Company’s principal executive officer and
      principal 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


19


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
      CORPORATIONDate:
      June 12, 2009
                
                By:
                /s/ E. Larry RyderE. Larry RyderExecutive Vice President – Finance andAdministration and Chief Financial Officer


20


Exhibit
Index





Exhibit No.
              
              Description3.1
              
              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 (incorporated by reference to Exhibit
      3.2 to the Company’s Form 10-Q (SEC File No. 000-25349) for the quarter
      ended August 31, 2006)4.1
              
              Amended
      and Restated Articles of Incorporation of the Company (See Exhibit
      3.1)4.2
              
              Amended
      and Restated Bylaws of the Company (See Exhibit 3.2)10.1*
              
              Deferred
      Bonus Agreement for Sekar Sundararajan, dated June 10,
  200910.2*
              
              Employment
      Package for Sekar Sundararajan31.1*
              
              Rule
      13a-14(a) Certification of the Company’s principal executive
      officer31.2*
              
              Rule
      13a-14(a) Certification of the Company’s principal financial
      officer32.1*
              
              Rule
      13a-14(b) Certification of the Company’s principal executive officer and
      principal 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


21