UNITED
STATES
 SECURITIES
AND EXCHANGECOMMISSION
 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 endedMay 4, 2008
 
 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
 ̈
 
 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  ̈ No
x
 
 Indicate the
number of shares outstanding of each of the issuer’s classes of common stock as
ofJune 6,
2008.
 
 Common
      stock, no par value
            11,461,486(Class
      of common stock)
            (Number
      of shares)
 
 1
 PART
I.  FINANCIAL INFORMATION
 
 Item
1.  Financial Statements
 
 HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (In
thousands, including share data)
 (Unaudited)
  May
      4,
                
                
                February
      3,2008
                
                
                2008AssetsCurrent
      assetsCash
      and cash equivalents
                
                $
                38,654
                
                
                $
                33,076Trade
      accounts receivable, less allowance for doubtful accountsof
      $1,607 and $1,750
      on each date
                
                
                34,549
                
                
                
                38,229Inventories
                
                
                46,155
                
                
                
                50,560Prepaid
      expenses and other current assets
                
                
                3,363
                
                
                
                3,552Total
      current assets
                
                
                122,721
                
                
                
                125,417Property,
      plant and equipment, net
                
                
                25,257
                
                
                
                25,353Goodwill
                
                
                3,778
                
                
                
                3,774Intangible
      assets
                
                
                5,884
                
                
                
                5,892Cash
      surrender value of life insurance policies
                
                
                12,703
                
                
                
                12,173Other
      assets
                
                
                2,467
                
                
                
                2,623Total
      assets
                
                $
                172,810
                
                
                $
                175,232Liabilities
      and Shareholders’ EquityCurrent
      liabilitiesTrade
      accounts payable
                
                $
                12,493
                
                
                $
                13,025Accrued
      salaries, wages and benefits
                
                
                2,713
                
                
                
                3,838Other
      accrued expenses
                
                
                2,347
                
                
                
                3,553Current
      maturities of long-term debt
                
                
                2,744
                
                
                
                2,694Total
      current liabilities
                
                
                20,297
                
                
                
                23,110Long-term
      debt, excluding current maturities
                
                
                4,513
                
                
                
                5,218Deferred
      compensation
                
                
                5,824
                
                
                
                5,369Other
      long-term liabilities
                
                
                709
                
                
                
                709Total
      liabilities
                
                
                31,343
                
                
                
                34,406Shareholders’
      equityCommon
      stock, no par value, 20,000 shares
      authorized,11,518and 11,561shares issued and
      outstanding on each date
                
                
                18,133
                
                
                
                18,182Retained
      earnings
                
                
                123,495
                
                
                
                122,835Accumulated
      other comprehensive loss
                
                
                (161
                )
                
                
                (191
                )Total
      shareholders’ equity
                
                
                141,467
                
                
                
                140,826Total
      liabilities and shareholders’ equity
                
                $
                172,810
                
                
                $
                175,232
  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
      4,
              
              
              April
      29,2008
              
              
              2007Net
      sales
              
              $
              71,027
              
              
              $
              77,294Cost of
      sales
              
              
              49,735
              
              
              
              55,216Gross profit
              
              
              21,292
              
              
              
              22,078Selling
      and administrative expenses
              
              
              17,342
              
              
              
              16,001Restructuring
      credit
              
              
              
              
              
              
              (129
              )Operating income
              
              
              3,950
              
              
              
              6,206Other
      income, net
              
              
              187
              
              
              
              533Income before income
      taxes
              
              
              4,137
              
              
              
              6,739Income
      taxes
              
              
              1,532
              
              
              
              2,453Net income
              
              $
              2,605
              
              
              $
              4,286Earnings
      per share:Basic
              
              $
              0.23
              
              
              $
              0.33Diluted
              
              $
              0.23
              
              
              $
              0.33Weighted
      average shares outstanding:Basic
              
              
              11,533
              
              
              
              13,172Diluted
              
              
              11,539
              
              
              
              13,173Cash
      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
      4,
              
              
              April
      29,2008
              
              
              2007Cash
      flows from operating activitiesCash
      received from customers.
              
              $
              74,776
              
              
              $
              79,493Cash
      paid to suppliers and employees
              
              
              (64,158
              )
              
              
              (56,173
              )Income
      taxes paid, net
              
              
              (2,061
              )
              
              
              (4,098
              )Interest
      received, net
              
              
              161
              
              
              
              387Net
      cash provided by operating activities
              
              
              8,718
              
              
              
              19,609Cash
      flows from investing activitiesAcquisitions,
      net of cash acquired
              
              
              
              
              
              
              (10,168
              )Purchase
      of property, plant and equipment
              
              
              (473
              )
              
              
              (730
              )Proceeds
      from the sale of property and equipment
              
              
              
              
              
              
              88Net
      cash used in investing activities
              
              
              (473
              )
              
              
              (10,810
              )Cash
      flows from financing activitiesPurchases
      and retirement of common stock
              
              
              (856
              )
              
              
              (7,261
              )Cash
      dividends paid
              
              
              (1,156
              )
              
              
              (1,327
              )Payments
      on long-term debt
              
              
              (655
              )
              
              
              (609
              )Net
      cash used in financing activities
              
              
              (2,667
              )
              
              
              (9,197
              )Net
      increase (decrease) in cash and cash equivalents
              
              
              5,578
              
              
              
              (398
              )Cash
      and cash equivalents at beginning of period
              
              
              33,076
              
              
              
              47,085Cash
      and cash equivalents at end of period
              
              $
              38,654
              
              
              $
              46,687Reconciliation
      of net income to net cash providedby operating
      activitiesNet
      income
              
              $
              2,605
              
              
              $
              4,286Depreciation
      and amortization
              
              
              574
              
              
              
              705Non-cash
      restricted stock awards and performance grants
              
              
              148
              
              
              
              11Restructuring
      credit
              
              
              
              
              
              
              (129
              )Loss on
      disposal of property
              
              
              
              
              
              
              9Provision
      for doubtful accounts
              
              
              96
              
              
              
              349Deferred
      income tax expense
              
              
              187
              
              
              
              777Changes
      in assets and liabilities, net of effect from acquisition:Trade
      accounts receivable
              
              
              3,584
              
              
              
              1,868Inventories
              
              
              4,405
              
              
              
              12,991Prepaid
      expenses and other assets
              
              
              (391
              )
              
              
              (343
              )Trade
      accounts payable
              
              
              (532
              )
              
              
              996Accrued
      salaries, wages and benefits
              
              
              (1,125
              )
              
              
              (653
              )Accrued
      income taxes
              
              
              (716
              )
              
              
              (2,421
              )Other
      accrued expenses
              
              
              (442
              )
              
              
              992Other
      long-term liabilities
              
              
              325
              
              
              
              171Net
      cash provided by operating activities
              
              $
              8,718
              
              
              $
              19,609
 
 The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
  4
 HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
 (In
thousands, except per share data)
 (Unaudited)
  
 For the
thirteen weeks ended May 4, 2008
 
 AccumulatedOther
              
              
              TotalCommon Stock
              
              
              Retained
              
              
              Comprehensive
              
              
              Shareholders’Shares Amount
              
              
              Earnings
              
              
              Loss
              
              
              EquityBalance
      at February 3, 2008
              
              
              11,561
              
              
              $
              18,182
              
              
              $
              122,835
              
              
              $
              (191
              )
              
              $
              140,826Net
      income
              
              
              
              
              
              
              
              
              
              
              2,605
              
              
              
              
              
              
              
              2,605Unrealized
      gain on interest rate swap
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              30
              
              
              
              30Total
      comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,635Cash
      dividends ($0.10 per share)
              
              
              
              
              
              
              
              
              
              
              (1,156
              )
              
              
              
              
              
              
              (1,156
              )Restricted
      stock compensation cost
              
              
              
              
              
              
              18
              
              
              
              
              
              
              
              
              
              
              
              18Repurchases
      of common stock
              
              
              (43
              )
              
              
              (67
              )
              
              
              (789
              )
              
              
              
              
              
              
              (856
              )Balance
      at May 4, 2008
              
              
              11,518
              
              
              $
              18,133
              
              
              $
              123,495
              
              
              $
              (161
              )
              
              $
              141,467
  The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
  5
 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 4, 2008
 
 1.
              Preparation of Interim
      Financial Statements
 
 The condensed
consolidated financial statements of Hooker Furniture Corporation and
subsidiaries (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 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, 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 audited consolidated
financial statements and accompanying notes included in the Company’s annual
report on Form 10-K for the fiscal year ended February 3, 2008.
 
 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 4,
2008 and ended on May 4, 2008.  These financial statements also
include the thirteen-week period that began January 29, 2007 and ended on April
29, 2007.
 
 References to
the 2009 fiscal year and comparable terminology in the notes to the condensed
consolidated financial statements mean the fiscal year that began February 4,
2008 and will end February 1, 2009.  References to the 2008 fiscal
year and comparable terminology in the notes to the consolidated financial
statements mean the fiscal year that began January 29, 2007 and ended February
3, 2008.
 
 2.
              Inventories
 
 May
      4,
              
              
              February
      3,2008
              
              
              2008Finished
      furniture
              
              $
              48,587
              
              
              $
              52,602Furniture
      in process
              
              
              1,032
              
              
              
              1,217Materials
      and supplies
              
              
              8,215
              
              
              
              7,814Inventories
      at FIFO
              
              
              57,834
              
              
              
              61,633Reduction
      to LIFO basis
              
              
              11,679
              
              
              
              11,073Inventories
              
              $
              46,155
              
              
              $
              50,560
 
 3.
              Property, Plant and
      Equipment
 
 May
      4,
              
              
              February
      3,2008
              
              
              2008Buildings
      and land improvements
              
              $
              23,295
              
              
              $
              23,076Machinery
      and equipment
              
              
              3,450
              
              
              
              3,425Furniture
      and fixtures
              
              
              26,418
              
              
              
              27,516Other
              
              
              3,982
              
              
              
              3,740Total
      depreciable property at cost
              
              
              57,145
              
              
              
              57,757Less
      accumulated depreciation
              
              
              33,446
              
              
              
              34,558Total
      depreciable property, net
              
              
              23,699
              
              
              
              23,199Land
              
              
              1,387
              
              
              
              1,387Construction
      in progress
              
              
              171
              
              
              
              767Property,
      plant and equipment, net
              
              $
              25,257
              
              
              $
              25,353
  6
 4.
              Goodwill and Intangible
      Assets
 
 May
      4,
              
              
              February
      3,2008
              
              
              2008Goodwill
              
              $
              3,778
              
              
              $
              3,774Non-amortizable
      Intangible AssetsTrademarks
      and trade names – Bradington-Young
              
              $
              4,400
              
              
              $
              4,400Trademarks
      and trade names – Sam Moore
              
              
              396
              
              
              
              396Trademarks
      and trade names – Opus Designs
              
              
              1,000
              
              
              
              1,000Total
      trademarks and trade names
              
              
              5,796
              
              
              
              5,796Amortizable
      Intangible AssetsNon-compete
      agreements
              
              
              700
              
              
              
              700Furniture
      designs
              
              
              100
              
              
              
              100Total
      amortizable intangible assets
              
              
              800
              
              
              
              800Less
      accumulated amortization
              
              
              712
              
              
              
              704Net
      carrying value
              
              
              88
              
              
              
              96Intangible
      assets
              
              $
              5,884
              
              
              $
              5,892
 
 5.
              Long-Term
      Debt
 
 May
      4,
              
              
              February
      3,2008
              
              
              2008Term
      loan
              
              $
              7,257
              
              
              $
              7,912Less
      current maturities
              
              
              2,744
              
              
              
              2,694Long-term
      debt, less current maturities
              
              $
              4,513
              
              
              $
              5,218
  6.
              Restructuring
 
 Severance
      andRelated Benefits
              
              
              Other
              
              
              TotalAccrued
      balance at February 3, 2008
              
              $
              829
              
              
              $
              193
              
              
              $
              1,022Cash
      payments
              
              
              
              
              
              
              (13
              )
              
              
              (13
              )Balance
      at May 4,
      2008
              
              $
              829
              
              
              $
              180
              
              
              $
              1,009
  7.
              Other
      Comprehensive Income
  Thirteen
      Weeks EndedMay
      4,
              
              
              April
      29,2008
              
              
              2007Net
      income
              
              $
              2,605
              
              
              $
              4,286Gain
      (loss) on interest rate swaps
              
              
              2
              
              
              
              (30
              )Portion
      of swap agreement’s fair value reclassified tointerest
      expense
              
              
              46
              
              
              
              12Other
      comprehensive income (loss) before tax
              
              
              48
              
              
              
              (18
              )Income
      tax (expense) benefit
              
              
              (18
              )
              
              
              7Other
      comprehensive income (loss), net of tax
              
              
              30
              
              
              
              (11
              )Comprehensive
      income
              
              $
              2,635
              
              
              $
              4,275
  7
 8.
              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.  The
Company has 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. The Company accounts 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 4,
2008:
 
 Number
      of
              
              Grant-Date
              
              Aggregate
              
              Compensation
              
              Grant-Date
      Fair ValueShares
              
              Fair
      Value
              
              Grant-Date
              
              Expense
              
              Unrecognized
      At(In
      Thousands)
              
              Per
      Share
              
              Fair
      Value
              
              Recognized
              
              May 4,
      2008Shared
      Issued on January 16, 2006Issued
              
              
              4,851
              
              
              
              $15.31
              
              
              
              $74Forfeited
              
              
              (784
              )
              
              
              15.31
              
              
              
              (12
              )Vested
              
              
              (147
              )
              
              
              15.31
              
              
              
              (2
              )3,920
              
              
              
              
              
              
              
              60
              
              
              
              $47
              
              
              
              $
      13Shares
      Issued on January 15, 2007Issued
              
              
              4,875
              
              
              
              $15.23
              
              
              
              74
              
              
              
              33
              
              
              
              41Shares
      Issued on January 15, 2008Issued
              
              
              4,335
              
              
              
              $19.61
              
              
              
              85
              
              
              
              9
              
              
              
              76Awards outstanding at
      May
      4, 2008:
              
              
              13,130
              
              
              
              
              
              
              
              $219
              
              
              
              $89
              
              
              
              $130
 
 9.
              Performance
      Grants
 
 On April 30,
2008, the Company’s Compensation Committee awarded two performance grants to
certain senior executives of the Company under the 2005 Stock Incentive Plan.
Payments under each grant will be based on the Company’s cumulative earnings per
share (“EPS”) and average annual return on equity (“ROE”) for the grant’s
designated performance period.  The respective performance periods for
the two grants are the fiscal two-year period ending January 31, 2010 and the
fiscal three-year period ending January 30, 2011.  Payment, if any,
under each performance grant will be paid in cash, shares of the Company’s
common stock or a combination of both, at the discretion of the Compensation
Committee.
 
 The Company
is accounting for these performance grants using the “liability method,” since
the (i) settlement amount for each grant will not be known until after
completion of the applicable performance period and (ii) settlement of the
grants may be made in common stock, cash or a combination of
both.  The estimated cost of each grant will be recorded to
compensation expense over the respective performance periods.  Through
May 4, 2008, $130,000 in compensation expense has been recorded for all
outstanding grants.  The fair values of the performance grants at the
grant date were estimated based on achieving 50% of the target performance
levels for the two-year grant, which amounted to $538,000, and 70% of target
performance levels for the three-year grant, which amounted to
$753,000.  A maximum of $3.2 million could be paid under these
grants.  The expected cost of the grants will be revalued each
reporting period.  As assumptions change regarding the achievement of
target performance levels, then a cumulative adjustment will be recorded and
future compensation expense will increase or decrease based on the currently
projected performance levels.    If the Company determines
that the minimum EPS and ROE performance thresholds for the grants will not be
met, no further compensation cost will be recognized and any previously
recognized compensation cost would be reversed.
 
 10.
              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.  Restricted shares awarded to non-employee members of the
board
  8
 of directors
that have not yet vested are considered when computed diluted earnings per
share.  As of May 4, 2008, there were approximately thirteen thousand
shares of non-vested restricted stock outstanding.
  Thirteen
      Weeks EndedMay
      4,
                
                
                April
      29,2008
                
                
                2007Net
      income
                
                $
                2,605
                
                
                $
                4,286Weighted
      average shares outstanding for basicearnings
      per share
                
                
                11,533
                
                
                
                13,172Dilutive
      effect of non-vested restricted stock awards
                
                
                6
                
                
                
                1Weighted
      average shares outstanding for dilutedearnings
      per share
                
                
                11,539
                
                
                
                13,173Basic
      earnings per share
                
                $
                .23
                
                
                $
                .33Diluted
      earnings per share
                
                $
                .23
                
                
                $
                .33
  11.
                Common
      Stock
 
 During the
fiscal 2008 first and second quarters, the Company’s Board of Directors
authorized the repurchase of up to $30 million of the Company’s common
stock.  The Company completed these repurchases in November 2007. The
Company repurchased in open market transactions a total of 1.4 million shares of
Company common stock under those authorizations at an average price of $21.36
per share, excluding commissions.
 
 On December
5, 2007, the Company announced that its Board of Directors had approved a new
authorization to repurchase up to $10 million of the Company’s common stock. On
April 16, 2008, the Company announced that the Board had increased this
authorization by $10 million, to $20 million. There is no expiration date for
this authorization, but the Company expects the purchases to be completed by the
end of the 2009 fiscal year.  Repurchases may be made from
time-to-time in the open market, or in privately negotiated transactions at
prevailing market prices that the Company deems appropriate.  With
respect to the December 2007 authorization, the Company entered into a trading
plan under Rule 10b5-1 of the Securities Exchange Act of 1934 for effecting some
or all of the purchases under this repurchase
authorization.   The Company expects to enter into a similar
trading plan for the April 2008 authorization.  The trading plan
contains certain provisions that could restrict the amount and timing of
purchases.  The Company can terminate these plans at any
time.  Through June 6, 2008, the Company had used $7.9 million of the
December 2007 authorization to purchase 407,831 shares of the Company’s common
stock, with $2.1 million remaining available for future purchases under this
plan.
 
 Since
February 2007, the Company has spent $37.9 million, excluding commissions to
repurchase 1.8 million shares of Company common stock under these authorizations
at an average price of $20.93 per share.
 
 12.
                Accounting
      Pronouncements
 
 In September
2006, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF No.
06-4 “Accounting for Deferred Compensation and Postretirement Benefit Aspects of
Endorsement Split-Dollar Life Insurance Arrangements.”  The task force
reached a consensus that for an endorsement split-dollar life insurance
arrangement, an employer should recognize a liability for future benefits under
FASB Statement No. 106, or APB Opinion No. 12, based on the substantive
agreement with the employee.  The scope of this EITF is limited to the
recognition of a liability and the related compensation costs for endorsement
split-dollar life insurance arrangements that provide a benefit to an employee
that extends to postretirement periods.  Because the Company’s related
endorsement split-dollar life insurance arrangements entered into in connection
with its executive life insurance program are limited to the employee’s active
service period with the Company, this EITF does not apply.
  9
 In March
2007, the EITF reached a consensus on EITF No. 06-10 “Accounting for Collateral
Assignment Split-Dollar Life Insurance Arrangements.”  The task force
reached a consensus that requires an employer to measure the asset associated
with collateral-assignment split-dollar life insurance based on the
arrangement’s terms.  Under the consensus, an employer would record a
liability for a postretirement benefit only if the employer has agreed to
maintain the life insurance policy during the employee’s retirement or provide
the employee with a death benefit.   The consensus is effective
for fiscal years beginning after December 15, 2007.  The Company
adopted the EITF No. 06-10 in its fiscal year 2009 first
quarter.   The adoption of EITF No. 06-10 did not have a material
impact on the Company’s financial position or results of
operations.
  In February
2007, the Financial Accounting Standards Boards (“FASB”) issued Statement of
Financial Accounting Standard (“SFAS”) No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an Amendment of FASB
Statement No. 115.”   This statement permits entities to choose
to measure many financial instruments and certain other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This statement is expected to expand the use of fair
value measurement, which is consistent with FASB’s long-term measurement
objectives for accounting for financial instruments.  This statement
is effective as of the beginning of an entity’s first fiscal year that begins
after November 15, 2007.  The Company adopted the standard in its
fiscal year 2009 first quarter. The adoption of SFAS 159 did not have a material
impact on the Company’s financial position or results of
operations.
  In September
2006, the FASB issued SFAS No. 157, “Fair Value Measurements”.  This
statement defines fair value, establishes a framework for measuring fair value
under U.S. generally accepted accounting principles, and expands disclosures
about fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements, FASB having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this statement does not require any
new fair value measurements. However, for some entities, the application of this
statement will change current practice.  This statement is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years.   The
Company adopted the standard in its fiscal year 2009 first quarter. The adoption
of SFAS 157 did not have a material impact on the Company’s financial position
or results of operations.
  Item
2.      Management’s Discussion and Analysis of
Financial Condition and Results of Operations
  This
quarterly report on Form 10-Q includes the Company’s unaudited consolidated
financial statements for the thirteen week (also referred to as “three months,”
“three-month period,” “quarter” or “quarterly period”) period ended May 4,
2008.  This report discusses the Company’s results of operations for
the period compared to the fiscal 2008 thirteen-week first quarter that ended
April 29, 2007 and the Company’s financial condition as of May 4,
2008.  References in this report to the 2009 fiscal year or comparable
terminology refer to the Company’s fiscal year that began February 4, 2008 and
will end February 1, 2009.
  Overview
  Hooker
Furniture Corporation is a home furnishings design, marketing and logistics
company with world-wide sourcing capabilities.  With the closing of
its last domestic wood furniture plant during the fiscal 2008 first quarter, the
Company is now focused on imported wood and metal and domestically produced and
imported upholstered home furnishings.
  In April
2007, the Company completed the acquisition of the assets of Sam Moore Furniture
Industries, Inc., a Bedford, Virginia manufacturer of upscale occasional chairs
with an emphasis on fabric-to-frame customization in the upper-medium to
high-end price niches.  The Company began operating the business as
Sam Moore Furniture LLC during the fiscal 2008 second quarter.
  The
acquisition of the assets of Opus Designs Furniture, LLC was completed in
December 2007.  The addition of the Opus Designs’ product line
provides the Company with a solid foundation to build a strong youth bedroom
program at more moderate price points, with a more comprehensive product line
and with superior sourcing arrangements.
  10
 Results of
operations for the thirteen-week first quarter ended May 4, 2008 reflect the
weak retail environment for home furnishings that has carried over from the
previous year. Discretionary purchases of furniture, particularly at the
upper-middle price points where the Company competes, are highly affected by
consumer confidence. Current economic factors, such as high energy and food
costs and a difficult housing and mortgage market, have resulted in a weak
retail environment. The Company believes however, that its business model
provides the flexibility necessary to adjust to changing market conditions by
controlling inventory purchases from suppliers. The Company also believes that
the current economic malaise is temporary and upon economic recovery, the
Company 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 4, 2008:
 
 ·
                Net
      sales declined by $6.3 million, or 8.1%, to $71.0 million during the
      fiscal 2009 first quarter compared to net sales of $77.3 million during
      the fiscal 2008 first quarter.  Excluding Sam Moore, net sales
      declined by $13.2 million, or 17.1% in the fiscal 2009 first quarter
      compared to fiscal 2008 first quarter.  Excluding Sam Moore and
      domestically produced wood furniture, net sales declined $7.0 million, or
      9.9% compared to the fiscal 2008 first quarter.  This
      decline reflects the year-over-year declines in incoming order rates
      the Company has experienced since the fiscal 2006 third quarter resulting
      from the industry-wide slow down in business at retail.
 ·
                Operating
      income for the fiscal 2009 first quarter decreased to $4.0 million, or
      5.6% of net sales, compared to $6.2 million, or 8.0% of net sales, in the
      fiscal 2008 first quarter, principally due
to:
  ·
                a $1.3
      million, or 8.4% increase in selling and administrative costs to $17.3
      million, or 24.4% of net sales, compared to $16.0 million, or 20.7% of net
      sales in the fiscal 2008 first quarter, principally due to the additional
      selling and administrative costs for Sam Moore, which was acquired at the
      close of the fiscal 2008 first quarter; partially offset
  by
  ·
                lower
      selling costs related to the Company’s wood and Bradington-Young
      upholstery operations; and
  ·
                an
      improvement in gross profit margin to 30.0% compared with 28.6% in the
      prior year quarter, principally as a result of significantly lower net
      sales of heavily discounted, discontinued, domestically produced wood
      furniture compared to the fiscal 2008 first
  quarter.
  ·
                The
      operations of Sam Moore Furniture are included in the Company’s results of
      operations as of the beginning of the fiscal 2008 second
      quarter.
  Results
of Operations
 
 The following
table sets forth the percentage relationship to net sales of certain items
included in the consolidated statements of operations.
  Thirteen
      Weeks EndedMay
      4,
                
                
                April
      29,2008
                
                
                2007Net
      sales
                
                
                100.0
                %
                
                
                100.0
                %Cost of
      sales
                
                
                70.0
                
                
                
                71.4Gross
      profit
                
                
                30.0
                
                
                
                28.6Selling
      and administrative expenses
                
                
                24.4
                
                
                
                20.7Restructuring
      credit
                
                
                
                
                
                
                (0.2
                )Operating
      income
                
                
                5.6
                
                
                
                8.0Other
      income, net
                
                
                0.3
                
                
                
                0.7Income
      before income taxes
                
                
                5.8
                
                
                
                8.7Income
      taxes
                
                
                2.2
                
                
                
                3.2Net
      income
                
                
                3.7
                
                
                
                5.5
 
 Net sales for
the fiscal year 2009 first quarter declined to $71.0 million compared to $77.3
million for the fiscal 2008 first quarter, principally due to lower unit volume
attributed to the continued industry-wide slow down in business at
retail.
  11
 Unit volume
decreased for Hooker imported and domestically produced wood and metal furniture
and Bradington-Young domestic and imported leather upholstered furniture
compared to the fiscal 2008 first quarter.  These declines in unit
volume were partially offset by $6.9 million in net sales of Sam Moore Furniture
upholstered furniture.
 
 Overall,
average selling prices decreased slightly during the fiscal 2009 first quarter
compared to the fiscal 2008 first quarter principally due to a sharp decline in
average selling prices for remaining domestic wood furniture inventories and a
slight decline in average selling prices for imported leather upholstered
furniture, partially offset by slight increases in average selling prices for
imported wood and metal furniture and domestically produced leather upholstered
furniture.  Imported wood and metal furniture average selling prices
increased slightly, principally due to the mix of products
shipped.  Domestic leather upholstered furniture average selling
prices increased slightly principally due to an overall increase in per unit
pricing.  The decline in imported leather upholstered prices was due
to the mix of products shipped and higher discounting on slower-moving
products.  The sharp decline in domestically produced wood furniture
selling prices was principally due to aggressive discounting offered on
discontinued products.
 
 Gross profit
margin increased to 30.0% of net sales in the fiscal 2009 first quarter compared
to 28.6% in the fiscal 2008 first quarter, principally as a result of
significantly lower net sales of sharply discounted, discontinued, domestically
produced wood furniture.Gross
margins for leather upholstered furniture declined slightly compared to the
prior year quarter.  Gross profit margin for Sam Moore’s fabric
upholstered products amounted to 24.4% of Sam Moore’s sales.
 
 Selling and
administrative expenses increased to $17.3 million, or 24.4% of net sales for
the fiscal 2009 first quarter, compared to $16.0 million, or 20.7% of net sales
for the fiscal 2008 first quarter.  The increase was principally due
to the selling and administrative costs for Sam Moore Furniture, which was
acquired at the end of the fiscal 2008 first quarter, partially offset
principally by lower selling costs related to the Company’s wood and
Bradington-Young upholstery operations.
 
 As a result
of the above, operating income for the fiscal 2009 first quarter decreased to
$4.0 million, or 5.6% of net sales, compared to $6.2 million, or 8.0% of net
sales in the fiscal 2008 first quarter.
  Other income,
net was $187,000, or 0.3% of net sales, for the fiscal 2009 first quarter
compared to $533,000, or 0.7% of net sales, for the fiscal 2008 first
quarter.  This decline was the result of a decrease in interest
income, due to lower cash and cash equivalent balances and lower returns earned
on those balances in the fiscal 2009 first quarter, and an increase in interest
expense.  During the prior year period, the Company recorded a
reduction in interest expense for the reversal of a previously accrued charge in
connection with an IRS audit that was not expected to be paid.
 
 The Company
recorded income tax expense of $1.5 million for the fiscal 2009 first quarter
and $2.5 million for the fiscal 2008 first quarter. The Company’s effective tax
rate increased to 37.0% for the fiscal 2009 first quarter from 36.4% during the
fiscal 2008 first quarter.  The effective rate increased in the fiscal
2009 first quarter principally due to higher state tax expense attributed to
California state income taxes incurred as a result of the new West Coast
distribution center, which opened in January 2008.
 
 Fiscal year
2009 first quarter net income was $2.6 million, or $0.23 per share, compared to
net income of $4.3 million, or $0.33 per share, in the fiscal 2008 first
quarter.  The earnings per share decrease resulting from lower net
income was partially offset by a decrease in weighted average shares outstanding
resulting from the repurchase 1.8 million shares of common stock since February
2007.
 
 Outlook
 
 The Company
continued to experience declines in incoming orders compared to the prior year
quarter during the fiscal 2009 first quarter.  The Company expects
that retail conditions will continue to be sluggish for the remainder of the
fiscal year.  However, the Company is taking the following steps to
address profitability over the near term in the face of weak sales:
  ·
                  measures
      to defer, reduce or eliminate certain spending
  plans;
  12
 ·
            continued
      refinements in managing the Company’s supply chain, warehousing and
      distribution operations;
 ·
            on-going
      adjustments to inventory levels to reflect current business conditions;
      and
 ·
            evaluation
      of the Company’s domestic upholstery manufacturing work schedules and
      facilities for optimal capacity utilization and operational
      efficiency.
 
 In addition,
net sales of discontinued domestic wood products, which have carried sharply
reduced margins, will continue to decline for the remainder of fiscal 2009, in
comparison to fiscal 2008.
 
 Since its
acquisition in April 2007, Sam Moore has operated at a loss. However, new
product introductions and cost reductions have resulted in slightly improved
performance in recent months.  Sam Moore continues to take steps to
improve profitability, including:
 
 ·
            the
      pursuit of additional distribution channels that the Company believes will
      generate additional sales growth;
and
 ·
            continued
      evaluation of manufacturing capacity utilization, work schedules and
      operating cost reductions to better match costs to current sales volume
      levels in the current retail
environment.
  During the
fiscal 2009 first quarter, the Company completed the integration of the Opus
Designs product line and has been successfully shipping product to customers
with few disruptions.  The Company believes that the addition of the
Opus line will result in significant growth for its youth bedroom
products.  The Company anticipates modest profitability for the Opus
Designs youth bedroom line in the first full year of operation.
  In the fiscal
2009 first quarter, the Company began shipping certain imported wood and
upholstered furniture products from its new Carson, California distribution
facility, and has expanded the service area for this facility to the ten
westernmost states.  The Company expects that this distribution center
will improve service and delivery, and reduce freight costs, to its dealers,
enhancing the value of the Company’s products in that market.
 
 In May 2008,
a powerful earthquake struck central China.  While China is a major
source of supply for many of the Company’s imported products, none of the
Company’s suppliers is located in the affected area.  There has been
no disruption in the supply of the Company’s imported products from
China.
 
 Financial
Condition, Liquidity and Capital Resources
 
 Balance Sheet and Working
Capital
 
 As of May 4,
2008, assets totaled $172.8 million, decreasing from $175.2 million at February
3, 2008, principally due to decreases in inventories, accounts receivable,
prepaid expenses and other current assets, other long-term assets and property,
plant and equipment, partially offset by increases in cash and cash equivalents
and cash surrender value of life insurance policies.  Shareholders’
equity at May 4, 2008 increased slightly to $141.5 million, compared to $140.8
million at February 3, 2008.  The Company’s long-term debt, including
current maturities, decreased to $7.3 million at May 4, 2008 from $7.9 million
at February 3, 2008, as a result of a scheduled debt repayment.
 
 Working
capital increased by $118,000, or 0.1%, to $102.4 million as of May 4, 2008,
from $102.3 million at the end of fiscal 2008, as a result of a $2.8 million
decrease in current liabilities, partially offset by a $2.7 million decline in
current assets.
 
 The decrease
in current assets is principally due to decreases of $4.4 million in
inventories, $3.7 million in accounts receivable and $188,000 in prepaid
expenses and other current assets, partially offset by an increase of $5.6
million in cash and cash equivalents.  Accounts receivable decreased
principally due to lower sales.
 
 Inventories
decreased 8.7%, to $46.2 million as of May 4, 2008, from $50.6 million at
February 3, 2008, principally due to:
 
 ·
            lower
      imported wood inventories, resulting from lower sales volume and continued
      supply chain initiatives; and,
  13
 ·
              lower
      manufactured finished goods and work in process inventories, principally
      due to the Company’s exit from domestic wood furniture manufacturing;
      partially offset by
 ·
              an
      increase in raw materials related to Bradington-Young’s leather upholstery
      lines.
 
 The decrease
in current liabilities is attributed to decreases of $1.2 million in other
accrued expenses, $1.1 million in accrued salaries, wages and benefits and
$532,000 in accounts payable, partially offset by an increase of $50,000 in
current maturities of long-term debt.
 
 Cash Flows – Operating,
Investing and Financing Activities
 
 During the
three months ended May 4, 2008, cash generated from operations ($8.7 million)
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) and
capital expenditures to maintain and enhance the Company’s business operating
systems and facilities ($473,000).
 
 During the
quarter ended April 29, 2007, cash generated from operations ($19.6 million), a
decrease in cash and cash equivalents ($398,000) and proceeds from the sale of
property, plant and equipment ($88,000) funded the acquisition of Sam Moore
Furniture ($10.2 million), the purchase and retirement of common stock ($7.3
million), payment of cash dividends ($1.3 million), capital expenditures to
maintain and enhance the Company’s business operating systems and facilities
($730,000) and a payment on long-term debt ($609,000).
 
 Cash
generated from operations during the first three months of fiscal 2009 decreased
to $8.7 million compared with $19.6 million generated during the three-month
period ended April 29, 2007.  The decrease was primarily due to higher
payments made to suppliers and employees, a decrease in cash received from
customers and a decrease in interest income earned on lower cash and cash
equivalent balances and at a lower return earned on those balances, partially
offset by a decrease in income tax payments.  The increase in payments
to suppliers and employees is primarily due to an increase in inventory
purchases.  During the prior year quarter, inventory levels were
higher, consequently purchases were lower.  Increased selling and
administrative costs and increased salaries and wage costs, both related to Sam
Moore also contributed to the increase in payments to suppliers.  The
decline in cash received from customers is principally attributed to lower net
sales.
 
 The Company
used $473,000 of cash for investing activities during the first three months of
fiscal year 2009 compared to $10.8 million during the three-month period ended
April 29, 2007.  The Company invested $473,000 to purchase property,
plant and equipment during the fiscal 2009 three-month period.  During
the three-month period ended April 29, 2007, the Company acquired the assets of
Sam Moore Furniture for $10.2 million (net of cash acquired) and invested
$730,000 to purchase property, plant and equipment.  The Company also
received $88,000 in proceeds from the sale of property, plant and equipment in
the fiscal 2008 first quarter.
 
 The Company
used $2.7 million of cash for financing activities during the first three months
of fiscal 2009 compared to $9.2 million in the three-month period ended April
29, 2007.  During the first three months of fiscal year 2009, the
Company 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 the
Company’s term loan.  During the fiscal year 2008 first quarter, the
Company purchased and retired $7.3 million of common stock, paid cash dividends
of $1.3 million and made a scheduled principal repayment of $609,000 on the
Company’s term loan.
 
 Swap
Agreements
 
 The Company
is party to an interest rate swap agreement that in effect provides for a fixed
interest rate of 4.1% through 2010 on its term loan.  In 2003, the
Company terminated a similar swap agreement, which in effect provided a fixed
interest rate of approximately 7.4% on that term loan. The Company’s $3.0
million payment to terminate the former swap agreement is being amortized over
the remaining payment period of the loan, resulting in an effective fixed
interest rate of approximately 7.4% on the term loan.  The Company is
accounting for the interest rate swap agreement as a cash flow
hedge.
  14
 The aggregate
fair market value of the Company’s swap agreement decreases when interest rates
decline and increases when interest rates rise.  Overall, interest
rates have declined since the inception of the Company’s swap
agreement.  The aggregate decrease in the fair market value of the
effective portion of the agreement of $161,000 ($260,000 pretax) as of May 4,
2008 and $191,000 ($311,000 pretax) as of February 3, 2008 is reflected under
the caption “accumulated other comprehensive loss” in the consolidated balance
sheets.  See “Note 7 – Other Comprehensive Income” to the 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 the Company’s 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.  The Company was in compliance with these covenants as
of May 4, 2008.
 
 Liquidity and Capital
Expenditures
 
 As of May 4,
2008, the Company had an aggregate $13.6 million available under its revolving
credit facility to fund working capital needs.  Standby letters of
credit in the aggregate amount of $1.4 million, used to collateralize certain
insurance arrangements and for imported product purchases, were outstanding
under the Company’s revolving credit facility as of May 4,
2008.  There were no other borrowings outstanding under the revolving
credit line on May 4, 2008.  Any principal outstanding under the
credit line is due March 1, 2011.
 
 The Company
believes that it has 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, dividends on the Company’s common stock,
repurchases of common stock under the Company’s stock repurchase program and
repayment of outstanding debt.  Cash flow from operations is highly
dependent on incoming order rates and the Company’s operating
performance.  The Company expects to spend $3.5 to $4.5 million in
capital expenditures during the remainder of fiscal year 2009 to maintain and
enhance its operating systems and facilities.
 
 During the
three months that ended May 4, 2008, the Company reduced outstanding long-term
debt, including current maturities by $655,000, through scheduled debt
payments.
 
 Dividends
 
 At its June
10, 2008 meeting, the board of directors of the Company declared a quarterly
cash dividend of $0.10 per share, payable on August 29, 2008 to shareholders of
record August 15, 2008.
  Accounting
Pronouncements
  During the
2009 first quarter, the Company adopted a number of new accounting
pronouncements, none of which had a material impact on the Company’s financial
position or results of operations.  See “Note 12 – Accounting
Pronouncements” to the consolidated financial statements.
 
 Forward-Looking
Statements
 
 Certain
statements made in this report, including certain statements under Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations, are not historical facts, but are forward-looking
statements.  These statements reflect the Company’s reasonable
judgment and outlook 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, including but not limited to:
  15
 ·
            general
      economic or business conditions, both domestically and
      internationally;
  ·
            price
      competition in the furniture
industry;
  ·
            adverse
      political acts or developments in, or affecting, the international markets
      from which the Company imports products, including duties or tariffs
      imposed on products imported by the
Company;
  ·
            changes
      in domestic and international monetary policies and fluctuations in
      foreign currency exchange rates affecting the price of the Company’s
      imported products;
  ·
            the
      cyclical nature of the furniture
industry;
  ·
            risks
      associated with the cost of imported goods, including fluctuation in the
      prices of purchased finished goods and transportation and warehousing
      costs;
  ·
            supply,
      transportation and distribution disruptions, particularly those affecting
      imported 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;
  ·
            the
      Company’s ability to successfully implement its business plan to increase
      Sam Moore Furniture’s and Opus Designs’ sales and improve their financial
      performance;
  ·
            achieving
      and managing growth and change, and the risks associated with
      acquisitions, restructurings, strategic alliances and international
      operations;
  ·
            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;
  ·
            risks
      associated with distribution through retailers, such as non-binding
      dealership arrangements;
  ·
            capital
      requirements and costs;
  ·
            competition
      from non-traditional outlets, such as catalogs, internet and home
      improvement centers; and
  ·
            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.
  Any forward
looking statement that the Company makes speaks only as of the date of that
statement, and the Company undertakes 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
 
 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, in some cases, through the
use of interest rate swap agreements with respect to interest
rates.
 
 The Company’s
obligations under its revolving line of credit and term loan bear interest at
variable rates.  The outstanding balance under the Company’s term
loan, including current maturities, amounted to $7.3 million as of May 4,
2008.  The Company has entered into an interest rate swap agreement
that, in effect, fixes the rate of interest on its 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 substantially 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 the Company’s results of operations or financial
condition.  For additional discussion of the Company’s swap agreement
see “Swap Agreements” in Management’s Discussion and Analysis in the Company’s
annual report on Form 10-K for the year ended February 3, 2008 and this
quarterly report.
 16
 For imported
products, the Company generally negotiates firm pricing denominated in U.S.
Dollars with its foreign suppliers, for periods typically of six months 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.  The majority of the Company’s 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 the
Company transacts its imported product purchases in U.S. Dollars, a relative
decline in the value of the U.S. Dollar could increase the price the Company
pays for imported products beyond the negotiated periods. The Company generally
expects to reflect substantially all of the effect of any price increases from
suppliers in the prices it charges for imported products.  However,
these changes could adversely impact sales volume and profit margin during
affected periods.
 
 Item
4.      Controls and Procedures
 
 Evaluation
of Disclosure Controls and Procedures
 
 The Company’s
management, with the participation of the Company’s principal executive officer
and principal financial officer, evaluated the effectiveness of the Company’s
disclosure controls and procedures as of the end of the Company’s fiscal quarter
ended May 4, 2008.  Based on this evaluation, the Company’s principal
executive officer and principal financial officer have concluded that the
Company’s disclosure controls and procedures were effective as of the end of the
period covered by this quarterly report to provide reasonable assurance 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 provide reasonable
assurance that such information is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission’s
rules and forms.
 
 Changes
in Internal Controls
 
 There have
been no changes in the Company’s internal control over financial reporting
during the Company’s quarter ended May 4, 2008, that have materially affected,
or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.
  PART
II.  OTHER INFORMATION
 
 Item
2.      Unregistered Sales of Equity Securities and Use
of Proceeds
 
 Purchases of Equity
Securities by the Issuer and Affiliated Purchasers
 
 The following
table provides information about common stock purchases by or on behalf of the
Company during the quarter ended May 4, 2008:
  Total Number of
              
              
              Maximum DollarTotal
              
              
              Average
              
              
              Shares Purchased
              
              
              Value of Shares ThatNumber of
              
              
              Price
              
              
              as Part of Publicly
              
              
              May Yet BeShares
              
              
              Paid per
              
              
              Announced
              
              
              Purchased Under thePurchased
              
              
              Share
              
              
              Program
              
              
              ProgramFebruary
      4, 2008 – March 9, 2008
              
              
              33,788
              
              
              
              $19.87
              
              
              
              33,788
              
              
              $13.4
      millionMarch
      10, 2008 - April 6, 2008
              
              
              9,199
              
              
              
              20.00
              
              
              
              9,199
              
              
              13.2 millionApril
      7, 2008 – May 4, 2008
              
              
              
              
              
              
              
              
              
              
              
              
              
              13.2 millionTotal
              
              
              42,987
              
              
              
              $19.90
              
              
              
              42,987
  17
 On December
5, 2007, the Company announced that its Board of Directors had approved a new
authorization to repurchase up to $10 million of the Company’s common stock. On
April 16, 2008, the Company announced that the Board had increased this
authorization by $10 million, to $20 million. There is no expiration date for
this authorization, but the Company expects the purchases to be completed by the
end of the 2009 fiscal year.  Repurchases may be made from
time-to-time in the open market, or in privately negotiated transactions at
prevailing market prices that the Company deems appropriate.  With
respect to the December 2007 authorization, the Company entered into a trading
plan under Rule 10b5-1 of the Securities Exchange Act of 1934 for effecting some
or all of the purchases under this repurchase
authorization.   The Company expects to enter into a similar
trading plan for the April 2008 authorization.  The trading plan
contains certain provisions that could restrict the amount and timing of
purchases.  The Company can terminate these plans at any
time.  Through June 6, 2008, the Company had used $7.9 million of the
December 2007 authorization to purchase 407,831 shares of the Company’s common
stock, with $2.1 million remaining available for future purchases under this
plan.
 
 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 thequarter
      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
            Form of
      Performance Grant Agreement (incorporated by reference to Exhibit 10.1 to
      the Company’s Form8-K
      (SEC File No. 000-25349) filed with the SEC on May 6, 2008)31.1*
            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
      pursuant to 18 U.S.C. Section1350 as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      200232.2*
            Rule
      13a-14(b) Certification of the Company’s 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
  18
 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 10, 2008
                By:  
      /s/
      R. Gary ArmbristerR. Gary
      ArmbristerChief
      Accounting Officer(Principal
      Accounting Officer)
   
 19
 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 thequarter
      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
                Form of
      Performance Grant Agreement (incorporated by reference to Exhibit 10.1 to
      the Company’s Form8-K
      (SEC File No. 000-25349) filed with the SEC on May 6, 2008)31.1*
                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
      pursuant to 18 U.S.C. Section1350 as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      200232.2*
                Rule
      13a-14(b) Certification of the Company’s 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