HOOKER FURNITURE CORP - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2000
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 (I.R.S. Employer
incorporation or organization) Identification Number)

440 East Commonwealth Boulevard Martinsville, VA 24112
-------------------------------------------------------
(Address of principal executive offices, Zip Code)

Registrant's telephone number, including area code: (540) 632-2133
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

Common Stock, no par value
--------------------------
(Title of Class)

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [_]

Aggregate market value of common equity held by non-affiliates of the
registrant: $26.9 million (based on the closing price as of February 14, 2001
as reported to the NASD by its member firms); there is no established public
trading market for the Company's common stock.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of February 14, 2001:

Common Stock, no par value 7,617,298
-------------------------- ---------
(Class of Common Stock) (Number of Shares)

Documents incorporated by reference: Portions of the registrant's definitive
Proxy Statement for its Annual Meeting of Stockholders scheduled to be held
March 29, 2001 are incorporated by reference into Part III.

HOOKER FURNITURE CORPORATION
TABLE OF CONTENTS

Part I Page

Item 1. Business...................................................................... 3
Item 2. Properties.................................................................... 7
Item 3. Legal Proceedings............................................................. 8
Item 4. Submission of Matters to a Vote of Security Holders........................... 8

Part II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters....................................................................... 10
Item 6. Selected Financial Data....................................................... 11
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................... 12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.................... 15
Item 8. Financial Statements and Supplementary Data................................... 15
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.......................................................... 15

Part III

Items 10 through 13....................................................................... 16

Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............... 16

Signatures................................................................................... 18

Index to Consolidated Financial Statements and Schedules..................................... F-1

2

Hooker Furniture Corporation
Part I

ITEM 1. BUSINESS.

General
Incorporated in Virginia in 1924, Hooker Furniture Corporation (the "Company")
has become a leading manufacturer and importer of residential furniture,
primarily targeted at the upper-medium price range. The Company offers
diversified products, consisting primarily of home office, entertainment
centers, imported occasional, bedroom and wall systems, across many style
categories within this price range. Its product depth and extensive style
selections make the Company an important furniture resource for retailers in its
price range and allow the Company to respond more quickly to shifting consumer
preferences. The Company has established a broad distribution network that
includes independent furniture stores, department stores, specialty retailers,
catalog merchandisers and national and regional furniture chains. The Company
emphasizes continuous improvement in its manufacturing processes to enable it to
continue providing competitive advantages to its customers such as quick
delivery, reduced inventory investment, high quality, and value. The Company
operates facilities in Martinsville and Roanoke, Virginia and Kernersville,
Maiden, and Pleasant Garden, North Carolina.

Products and Styles
The Company's product lines cover most major design categories. The Company
believes that the diversity of its product lines enables it to anticipate and
respond quickly to changing consumer preferences and provides retailers an
important furniture resource in the upper-medium price range. The Company
intends to continue expanding its product styles with particular emphasis on
home office, entertainment centers, occasional furniture and bedroom. The
Company believes that its products represent good value and that the quality and
style of its furniture compare favorably with more premium-priced products.

The Company provides furniture products in a variety of materials, woods,
veneers, and finishes. The number of patterns by product line are:

Number of Patterns
Home office................... 46
Wall systems.................. 26
Entertainment centers......... 39
Imported lines................ 89
Bedroom....................... 14

These product lines cover most major design categories including European
traditional, transitional, American traditional, and country/casual designs.

The Company designs and develops new product styles semi-annually to replace
discontinued items or styles and, if desired, expand product lines. The
Company's product design process begins with marketing personnel identifying
customer needs and conceptualizing product ideas, which generally consist of a
group of related furniture pieces. A variety of sketches are produced, usually
by independent designers, from which prototype furniture pieces are built. The
Company invites key dealers and independent sale representatives to view and
critique the prototypes. From this input, changes in design are made and the
Company's engineering department prepares a sample for actual full-scale
production. The Company introduces its new product styles at the fall and
spring international furniture markets.

3

Distribution
The Company has developed a broad domestic customer base and also sells to a
limited international market. The Company sells its furniture through
approximately 85 independent sales representatives to independent furniture
retailers, catalog merchandisers, and national and regional chain stores.
Representative customers include Federated Department Stores, Neiman Marcus,
Dillard's Department Stores, Nebraska Furniture Mart and Haverty's. The Company
believes this broad network reduces its exposure to regional recessions, and
allows it to capitalize on emerging channels of distribution. The Company
offers tailored merchandising programs to address each channel of distribution.

The general marketing practice followed in the furniture industry is to exhibit
products at international and regional furniture markets. In the spring and
fall of each year, a nine-day furniture market is held in High Point, North
Carolina, which is attended by most buyers and is regarded by the industry as
the international market. The Company utilizes approximately 46,000 square feet
of showroom space at the High Point market to introduce new products, increase
sales of its existing products, and test ideas for future products.

The Company has sold to over 3,800 customers during the past fiscal year, and
approximately 2.3% of the Company's sales in 2000 were to international
customers. No single customer accounted for more than five percent of the
Company's sales in 2000. No material part of the Company's business is
dependent upon a single customer, the loss of which would have a material effect
on the business of the Company. The loss of several of the Company's major
customers could have a material impact on the business of the Company.

Manufacturing
The Company's manufacturing strategy is to produce products, which are on the
leading edge of changing consumer demand for the home, such as home theater,
home office and computer furniture, as well as traditional bedroom. The Company
stresses strong customer relationships in developing new products as well as
improving existing ones. The Company believes strongly in employee involvement
with employee and management teams working and communicating in all areas of
manufacturing to improve production and quality related issues, stressing
quality improvement not quality control. To meet customer expectations of just-
in-time inventory delivery, the Company's strategy has been to strike a balance
between minimizing cutting size together with increasing the frequency of
cuttings on the one hand, and the efficiencies gained from longer production
runs on the other. In recent years, cutting sizes have been reduced, frequencies
of cuttings increased, and finished goods inventory levels increased. The
Company manufactures products using a flexible plant philosophy structure with
all plants capable of making and sharing product lines according to customer
demands and plant loads, which allows for quicker delivery of high demand
products. The Company is in constant contact with key suppliers in forming
partnerships which communicate both quality and delivery issues which are
imperative for both the Company and supplier to adjust to ever changing customer
requirements.

The Company operates manufacturing facilities in North Carolina and Virginia
consisting of an aggregate of approximately 1.8 million square feet. The Company
considers its present equipment to be generally modern, adequate and well
maintained.

The Company schedules production of its various styles based upon actual and
anticipated orders. The Company's backlog of unshipped orders was $23.3 million
at November 30, 2000 and $33.6 million at November 30, 1999. With the emphasis
in recent years on inventory-on-demand, dealers no longer find it necessary to
place orders as far in advance as was once the case. In addition, it is the
Company's policy and industry practice to allow order cancellation up to time of
shipment, therefore customer orders are not firm until shipped. For these
reasons, management does not consider order backlogs to be an accurate indicator
of expected business. Historically, however, 91% of all orders booked are
ultimately shipped. Backlogs are normally shipped within six months. During
late January through early February 2000, the Company made the conversion to a
new order processing system. With the new system in place, the Company is
processing

4

orders faster with less human intervention. As a result, the backlog of unfilled
orders that the Company carries at any point in time has been significantly
reduced. With the new system in place, the Company is achieving a significant
reduction in the amount of time required to process a customer's order, from
receipt of the order until ultimate shipment from inventory.

Imported Lines
The Company imports finished furniture in a variety of styles and materials, and
markets the products under the Company name through its normal distribution
channels. Product lines include occasional tables, consoles, chests, casual
dining pieces, bedroom pieces and accent items. The Company imports products
from China, the Philippines, Mexico, and Indonesia from approximately 14 agents
representing 32 factories. All transactions are in U.S. dollars. Because of
the large number and diverse nature of foreign factories, the Company has
flexibility in the placement of product in any particular country or factory.
Factories located in China have become an important resource for the Company.
The sudden disruption in the Company's supply chain from China could
significantly impact the Company's ability to fill customer orders for products
manufactured in that country for a three to six month period. However, the
Company believes that such a disruption in supply would not have a material
adverse effect on the Company's financial condition or results of operations.

Raw Materials
The principal materials used by the Company in manufacturing its products
include lumber, veneers, plywood, particleboard, hardware, glue, finishing
materials, glass products and fasteners. The Company uses a variety of species
of lumber, including cherry, oak, poplar, pine and maple. The Company's five
largest suppliers accounted for approximately 14.8% of its purchases in 2000.

The Company believes that its sources of supply for these materials are adequate
and that it is not dependent on any one supplier.

Competition
The Company is the sixteenth largest furniture manufacturer in North America
based on 1999 sales, according to Furniture/Today, a trade publication. The
furniture industry is highly competitive and includes a large number of foreign
and domestic manufacturers, none of which dominates the market. The markets in
which the Company competes include a large number of relatively small
manufacturers; however, certain competitors of the Company have substantially
greater sales volumes and financial resources than the Company. Competitive
factors in the upper-medium price range include style, price, quality, delivery,
design, service and durability. The Company believes that its long-standing
customer relationships, customer responsiveness, consistent support of existing
diverse product lines that are high quality and good value and experienced
management are competitive advantages.

Employees
At November 30, 2000, the Company had approximately 2,030 employees. None of
the Company's employees are represented by a labor union. The Company considers
its relations with its employees to be good.

The Corporation sponsors the Hooker Furniture Corporation Employee Stock
Ownership Plan (the "ESOP") to provide ownership and retirement benefits for
eligible employees. The ESOP covers substantially all the Company employees. The
ESOP enables employees to share in the growth of the Company and to accumulate a
beneficial ownership interest in the Company's Common Stock.

5

Patents and Trademarks
The trade name of the Company represents many years of continued business. The
Company believes such name is well recognized and associated with quality in the
furniture industry. The Company owns a number of patents, trademarks and
licenses, none of which is considered to be material to the Company.

Governmental Regulations
The Company is subject to federal, state and local laws and regulations in the
areas of safety, health and environmental pollution controls. Compliance with
these laws and regulations has not in the past had any material effect on the
Company's earnings, capital expenditures, or competitive position; however, the
effect of such compliance in the future cannot be predicted. Management
believes that the Company is in material compliance with applicable federal,
state and local safety, health, and environmental regulations. See "Item 8.
Legal Proceedings" for information concerning certain environmental matters.

Forward-Looking Statements
Certain statements made in this report are not based on historical facts, but
are forward-looking statements. These statements can be identified by the use
of forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy. These statements
reflect the Company's reasonable judgment with respect to future events and are
subject to risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Such risks and
uncertainties include the cyclical nature of the furniture industry,
fluctuations in the price of lumber, which is the most significant raw material
used by the Company, competition in the furniture industry, capital costs and
general economic or business conditions, either nationally or internationally.

6

ITEM 2. PROPERTIES.

Set forth below is certain information with respect to the Company's principal
properties. The Company believes that all these properties are well maintained
and in good condition. The Company believes its manufacturing facilities are
being efficiently utilized. The Company estimates that its facilities are
currently being operated at approximately 92% capacity, on a one-shift basis.
Each manufacturing facility is flexible in regard to product lines manufactured,
allowing the Company to shift products between plants according to customer
sales and delivery demands. All Company plants are equipped with automatic
sprinkler systems and modern fire and spark detection systems, which the Company
believes are adequate. All facilities set forth below are active and
operational.

Approximate
Facility Size
Location Primary Use (Square Feet) Owned or Leased
Martinsville, VA Corporate Headquarters 32,000 Owned
Martinsville, VA Manufacturing 760,000 Owned
Martinsville, VA Distribution/Imports 580,000 Owned
Martinsville, VA Distribution 189,000 Owned (1)
Martinsville, VA Plywood Production 146,000 Owned
Martinsville, VA Distribution/Manufacturing 190,000 Owned (1)
Kernersville, NC Manufacturing 115,000 Owned
Roanoke, VA Manufacturing 265,000 Owned
Pleasant Garden, NC Manufacturing 300,000 Owned
Maiden, NC Manufacturing 200,000 Owned
High Point, NC Showroom 46,000 Leased (2)

(1) The Company is presently leasing this facility to a third party.

(2) Lease expires October 31, 2005.

7

ITEM 3. LEGAL PROCEEDINGS.

On June 30, 2000, the Company acquired all of the outstanding shares of Triwood,
Inc. ("Triwood"), a joint venture in which the Company had been a 50%
shareholder, for an aggregate consideration of $1.9 million. Triwood formerly
produced particleboard for furniture manufacturing. During 1998, the joint
venture was cited by the Environmental Protection Agency ("EPA") for a violation
of certain regulations under the Clean Air Act Amendments of 1990. The joint
venture members determined that the cost of modification to the plant to come
into compliance, together with other need capital improvements, would be
prohibitive and the joint venture elected to cease operations in November 1998.
The purchase price includes the assumption of the first $100,000 of liability,
if any, related to the 1998 EPA citation. Pursuant to an indemnification
agreement, the Company and the other former joint venture owner will share
equally, any liability in excess of $100,000. Based upon its most recent
information, management does not believe the liability, if any, will be material
to the Company's financial condition or results of operations.

Based upon performance tests conducted in November 1998, the EPA issued the
Company a Notice of Violation in March 1999 for the failure of two boilers at
the Company's Martinsville facility to meet particulate emission limitations
under the Clean Air Act. The Company made adjustments to one non-compliant
boiler and conducted a second performance test in February 1999. The results of
that second performance test indicated that the boiler was in compliance with
its particulate limitations. The Company has forwarded those results to the
EPA. The Company is currently implementing a plan to bring the second non-
compliant boiler into compliance with its particulate emission limitations. No
final action has been taken by EPA in this matter, including the assessment of
fines against the Company. Company management anticipates that costs incurred
by the Company in connection with bringing both boilers into compliance,
including any fines that might be levied by the EPA, will not have a material
adverse affect on the Company's financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

8

HOOKER FURNITURE CORPORATION
Executive Officers of the Registrant

The Company's executive officers and their ages as of February 14, 2001 and the
year each joined the Company or its Board are as follows:

Year Joined
Name Age Position Company

Paul B. Toms, Jr. 46 Chairman and Chief Executive Officer 1983

Douglas C. Williams 53 President and Chief Operating Officer 1971

E. Larry Ryder 53 Executive Vice President - Finance and 1977
Administration, Assistant Secretary, and
Assistant Treasurer
Raymond T. Harm 51 Senior Vice President - Sales 1999

Henry P. Long, Jr. 49 Senior Vice President - Merchandising and 1983
Design

Paul B. Toms, Jr. has been Chairman and Chief Executive Officer since December
2000. Mr. Toms was President and Chief Operating Officer from December 1999 to
December 2000. Mr. Toms was Executive Vice President - Marketing from 1994 to
December 1999, Senior Vice President - Sales & Marketing from 1993 to 1994 and
Vice President - Sales from 1987 to 1993. Mr. Toms joined the Company in 1983
and has been a Director since 1993. Mr. Toms is the nephew of J. Clyde Hooker,
Jr.

Douglas C. Williams has been President and Chief Operating Officer since
December 2000. He was Executive Vice President - Manufacturing from December
1999 to December 2000. He was Senior Vice President - Manufacturing from 1987 to
1999 and Vice President - Manufacturing from 1986 to 1987. Prior to 1986, he
held various positions in production. Mr. Williams joined the Company in 1971
and has been a Director since 1987.

E. Larry Ryder has been Executive Vice President - Finance and Administration
since December 2000, Assistant Treasurer since 1998, and Assistant Secretary
since 1990. He was Senior Vice President - Finance and Administration from
December 1987 to December 2000. He was Treasurer from 1989 to 1998 and Vice
President - Finance and Administration from 1983 to 1987. Prior to 1983, Mr.
Ryder served in various financial capacities. Mr. Ryder joined the Company in
1977 and has been a Director since 1987.

Raymond T. Harm has been Senior Vice President - Sales since joining the Company
in 1999. Prior to joining the Company, he served as Vice President - Sales for
The Barcalounger Company from 1992 to 1999. Prior to 1992, Mr. Harm served in
various sales management positions with The Barcalounger Company.

Henry P. Long, Jr. has been Senior Vice President - Merchandising and Design
since 1994. He was Vice President - Sales from 1987 to 1994. Mr. Long joined
the Company in 1983 and has been a Director since 1993.

9

Hooker Furniture Corporation
Part II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The table below sets forth the high and low sales prices per share for the
Company's Common Stock for the periods indicated as reported to the National
Association of Securities Dealers, Inc. (the "NASD") by the NASD's member firms.
The Company's Common Stock is not listed for trading on any securities exchange
or on Nasdaq or any other inter-dealer quotation system of a registered national
securities association. There is no established public trading market for the
Company's Common Stock. The stock price information reported in the tables
below represents a limited number of transactions in the Company's Common Stock
in the "over-the-counter" market during the periods indicated.

2000 1999
High Low High Low
First Quarter....... $13.50 $11.00 $15.75 $13.00
Second Quarter...... 12.50 8.00 15.13 12.00
Third Quarter....... 11.50 8.00 15.00 11.00
Fourth Quarter...... 12.50 8.00 14.50 9.00

As of February 1, 2001, the Company had approximately 865 beneficial
stockholders and 1,946 current and former employees participating in the
Company's ESOP. The Company pays quarterly dividends on its Common Stock on or
about the last day of February, May, August and November, when declared by the
Board of Directors, to stockholders of record approximately two weeks earlier.
Although the Company presently intends to declare cash dividends at historical
levels on a quarterly basis for the foreseeable future, the determination as to
the payment and the amount of any future dividends will be made by the Board of
Directors from time to time and will depend on the Company's then current
financial condition, capital requirements, results of operations and any other
factors then deemed relevant by the Board of Directors. The following table sets
forth the dividends per share paid by the Company with respect to its Common
Stock during the Company's two most recent fiscal years:

2000 1999
First Quarter............... $0.085 $0.075
Second Quarter.............. 0.085 0.075
Third Quarter............... 0.085 0.075
Fourth Quarter.............. 0.085 0.075

All per share information reflected above has been adjusted to reflect a two-
for-one stock split distributed in the form of a stock dividend on January 31,
2000.

10

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data for each of the last five fiscal years
ended November 30, 2000 has been derived from the Company's audited financial
statements. The selected financial data should be read in conjunction with the
Financial Statements, including the related Notes, and "Management's Discussion
and Analysis" included elsewhere in this Annual Report.

For The Year Ended November 30,
(In thousands, except per share data)

2000 1999 1998 1997 1996
Income Statement Data (1):
Net sales............................. $250,828 $228,803 $206,084 $176,050 $161,861
Cost of goods sold.................... 188,143 171,175 158,137 134,579 120,286
Selling and administrative expenses... 39,738 34,094 31,034 25,863 24,220
Income from operations................ 22,947 23,534 16,913 15,608 17,355
Other income (expense), net........... (38) (358) 114 (31) 148
Income before income taxes............ 22,909 23,176 17,027 15,577 17,503
Income taxes.......................... 7,995 8,881 6,241 5,530 6,715
Net income............................ 14,914 14,295 10,786 10,047 10,788

Per Share Data (2):
Basic and diluted earnings per share.. 2.06 1.87 1.40 1.30 1.39
Cash dividends per share.............. 0.34 0.30 0.28 0.26 0.22
Net book value per share (3).......... 14.68 12.52 10.97 9.86 8.85
Weighted number of shares
outstanding......................... 7,257 7,636 7,692 7,734 7,750

Balance Sheet Data:
Cash.................................. 1,243 157 3,625 827 1,997
Inventories........................... 42,785 37,051 35,812 33,475 26,013
Working capital....................... 60,669 54,557 51,793 47,153 37,555
Total assets.......................... 133,531 116,423 111,233 98,290 87,370
Long-term debt (including current
maturities)......................... 29,500 7,000 12,062 9,985 7,228
Common stock held by ESOP............. 10,412 10,129 10,213 10,044 9,230
Stockholders' equity.................. 75,559 85,234 73,900 66,210 59,326

(1) Certain items in the financial statements for periods prior to 2000 have
been reclassified to conform to the 2000 method of presentation.

(2) All share and per share data reflect the effect of a two-for-one stock split
distributed in the form of a stock dividend on January 31, 2000.

(3) Net book value per share is derived by the sum of (i) "common stock held by
ESOP" and (ii) "total stockholders' equity" over the number of common shares
issued and outstanding excluding unearned ESOP common shares issued.

11

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following discussion should be read in conjunction with the Selected
Financial Data, the Financial Statements, and the related Notes contained
elsewhere in this Annual Report.

Results of Operations
The following table sets forth the percentage relationship to net sales of
certain items included in the statements of income:

For the Year Ended November 30,
2000 1999 1998
Net sales........................... 100.0% 100.0% 100.0%
Cost of sales....................... 75.0% 74.8 76.7
----- ----- -----
Gross profit...................... 25.0 25.2 23.3
Selling & administrative expenses... 15.9 14.9 15.1
----- ----- -----
Operating income.................. 9.1 10.3 8.2
Other income (expense), net......... (0.2) 0.1
----- ----- -----
Income before income taxes........ 9.1 10.1 8.3
Income taxes........................ 3.2 3.9 3.1
----- ----- -----
Net income........................ 5.9% 6.2% 5.2%
===== ===== =====

2000 Compared to 1999
Net sales increased $22.0 million or 9.6% in 2000 to $250.8 million compared to
$228.8 million in 1999. The increase was due principally to higher unit volume
in imported and home office furniture partially offset by lower unit volume in
bedroom furniture and entertainment centers. Average selling prices were
slightly lower during the 2000 period, principally due to the mix of products
shipped (primarily increased imported furniture shipments).

Gross profit margin for 2000 decreased to 25.0% from 25.2% in the prior year.
Higher employee benefits cost for manufacturing employees (primarily medical
claims and retirement cost for the Company's ESOP), and higher raw material
costs (primarily lumber and wood products) as a percent of sales, were partially
offset by the lower delivered cost of imported furniture as a percent of net
sales.

Selling and administrative expenses rose $5.6 million to 15.9% of net sales in
2000 compared to 14.9% in 1999. The increase in expenses was due principally to
higher selling costs to support increased sales, higher warehousing and shipping
costs resulting from the interim operation of dual warehousing facilities during
the first half of the year, increased depreciation expense related to certain
operating systems placed in service in the first quarter of 2000, and fees
incurred in connection with the tender offer by the Company's ESOP to purchase
1.8 million shares of the Company's stock from existing stockholders in
September 2000 (the "Tender Offer").

In 1999, the Company began a 180,000 square foot addition to its central
distribution center (the "CDC") in Martinsville, Virginia. The Company
substantially completed the consolidation of finished inventory formerly kept in
three separate warehouses into the CDC in 1999, but continued to operate dual
facilities through March 2000. The Company opened the 180,000 square foot
addition to its central distribution center in February 2000 and closed the one
remaining dual facility in early April 2000. The closed facility is presently
leased.

12

As a result of the above, operating income decreased to 9.1% of net sales in
2000 from 10.1% in 1999.

The Company's effective tax rate decreased from 38.3% in 1999 to 34.9% in 2000.

On June 30, 2000, the Company purchased the remaining 50% interest in Triwood,
Inc. ("Triwood"), the Company's former particleboard facility that ceased
operations in November 1998. On July 1, 2000, the Company restructured its
Import Division operations into Triwood, which is being accounted for as a
wholly owned subsidiary.

1999 Compared to 1998
Net sales increased $22.7 million or 11.0% in 1999 to $228.8 million compared to
$206.1 million in 1998. The increase was due principally to continued increased
unit volume in two major product lines: imported furniture and home office
furniture.

Gross profit margin for 1999 increased to 25.2% compared to 23.3% for 1998. The
increase was due primarily to improved operating efficiencies, lower raw
material costs offset partially by the higher delivered cost of imported
furniture, and higher average unit selling prices.

Selling and administrative expenses increased $3.1 million to $34.1 million in
1999 compared to 1998. As a percentage of net sales, selling and administrative
expenses declined to 14.9% in 1999 from 15.1% in 1998. The increase in expenses
was principally due to increased costs of warehouse and shipping and higher
salaries and benefits. During 1999, the Company moved to centralized finished
goods warehousing, requiring a duplicity of facilities during much of the year.

As a result of the above, operating income increased from 8.2% of net sales in
1998 to 10.3% of net sales in 1999.

The Company's effective tax rate increased from 36.6% in 1998 to 38.3% in 1999.

Financial Condition, Liquidity and Capital Resources
As of November 30, 2000, assets totaled $133.5 million, up from $116.4 million
at November 30, 1999. Stockholders' equity at November 30, 2000, decreased to
$75.6 million, from $85.2 million at November 30, 1999. The decrease reflects
the effect of the purchase of 1.8 million shares of the Company's stock by the
ESOP. The Company's long-term debt including current maturities increased $22.5
million to finance the ESOP Tender Offer. Working capital increased to $60.7
million as of November 30, 2000 from $54.6 million at the end of the 1999
period, reflecting the Company's increased investment in receivables and
inventory to support the higher sales levels experienced during 2000. The
incoming order rate has declined since year-end, apparently reflecting the
effect of the softening economy. The Company has reduced operating schedules at
its factories in response and expects shipments during the fiscal first quarter
of 2001 to approximate or reflect a slight decline from the first quarter of
2000.

During 2000, cash generated from operations of $16.3 million and net borrowings
of $22.5 million funded a $22.5 million loan to the ESOP for purposes of
completing the ESOP Tender Offer, capital expenditures amounting to $12.0
million, the acquisition of Triwood for $801,000, dividend payments totaling
$2.5 million, and an increase in available cash of $1.1 million. During 1999,
cash generated from operations of $13.3 million and available cash of $3.5
million funded $8.6 million in capital expenditures, net debt repayments of $5.1
million, dividend payments of $2.3 million and purchases of the Company's common
stock totaling $755,000. In 1998, cash from operations of $15.1 million and net
borrowings of $2.1 million funded capital expenditures of $11.5 million, an
increase in available cash of $2.8 million, dividend payments of $2.2 million
and purchases of the Company's common stock totaling $775,000.

13

Cash generated from operating activities in 2000 totaled $16.3 million compared
to $13.3 million and $15.1 million in 1999 and 1998, respectively. During the
2000 period, higher cash received from customers, resulting from increased
sales, and lower tax payments were partially offset by higher payments to
suppliers and employees, as compared with the 1999 period. In 1999, higher
payments to suppliers, employees and for income taxes were partially offset by
higher cash received from customers.

Investing activities consumed $12.8 million during the 2000 period compared to
$8.6 million in 1999 and $11.5 million in 1998. Capital expenditures in all
three years reflect the Company's investment in property, plant and equipment
for expanded furniture manufacturing capacity, distribution, and the maintenance
of its facilities in good operating condition. Capital expenditures were higher
in the 2000 period as the Company completed the addition to the CDC, completed
its construction of raw lumber grading, storage and drying facilities at the
Maiden, North Carolina plant, which were placed in service in April 2000, and
acquired Triwood. During 1998, the Company purchased the CDC.

The Company used cash for financing activities of $2.4 million in 2000, compared
to $8.1 million in 1999 and $850,000 in 1998. During 2000 dividend payments of
$2.4 million were funded from operations. In 1999, cash from operations and
available cash funded net debt repayments of $5.1 million, dividend payments of
$2.3 million and purchases of 54,160 shares of the Company's common stock at an
average price of $13.94 per share ($755,000 aggregate). During 1998, dividend
payments of $2.2 million and the purchase of 58,702 shares of the Company's
common stock at an average price of $13.20 per share ($775,000 aggregate), were
funded from operations and net borrowings of $2.1 million.

On November 30, 2000, the Company had $10.0 million available under its
revolving line of credit and $9.0 million available under additional lines of
credit to fund working capital needs. The Company believes it has the financial
resources needed to meet business requirements for the foreseeable future.

In September 2000, the Company's ESOP completed the Tender Offer at a price of
$12.50 per common share purchased. In order to finance the ESOP Tender Offer,
the Company borrowed $22.5 million under a 10-year term loan, at an effective
interest rate of approximately 7.4% per annum, and loaned the proceeds to the
ESOP. The ESOP will repay the loan to the Company over a 25-year period with
interest at 8.0% from dividends and employer contributions to the Plan. In the
fourth quarter of 2000, the Company recognized $678,000 in ESOP cost for
compensation and dividends as it committed to release 39,313 shares of stock
acquired in the Tender Offer to participants.

Environmental Matters
Hooker Furniture Corporation is committed to protecting the environment as
evidenced by its products and its manufacturing operations. The Company's
manufacturing sites generate both hazardous and non-hazardous wastes, the
treatment, storage, transportation and disposal of which are subject to various
local, state and national laws relating to protecting the environment. The
Company is in various stages of investigation or remediation of alleged or
acknowledged contamination at current manufacturing sites, and at Triwood. The
Company's policy is to record environmental liabilities when loss amounts are
probable and can be reasonably estimated. The costs associated with the
Company's environmental responsibilities, compliance with federal, state and
local laws regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, has not had, and in the
opinion of management, will not have a material effect on the Company's
financial position, results of operations, capital expenditures or competitive
position.

14

Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statements of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"), which establishes accounting
and reporting standards for derivative instruments. SFAS 133 requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. In
June 2000, the FASB issued SFAS No. 138 Accounting for Derivative Instruments
and Hedging Activities ("SFAS 138"), an amendment of SFAS 133, addressing a
number of issues contained therein. SFAS 133 and SFAS 138 are effective for all
fiscal quarters of fiscal years beginning after June 15, 2000, and require
application prospectively. Management believes that the adoption of SFAS 133 and
SFAS 138 will not have a material impact on the Company's financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's obligations under its lines of credit, industrial revenue bonds,
and term loan bear interest at variable rates. The Company has entered into
interest rate swap agreements that, in effect, fix the rate of interest on the
industrial revenue bonds at 4.71% through 2006 and on the term loan at 7.4%
through 2010. At November 30, 2000 the Company had no debt outstanding under
its lines of credit. A 10% fluctuation in market interest rates would not have
a material impact on the Company's results of operations or financial condition.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements and schedule listed in Items 14(a)(1) and 14(a)(2) of
this report are incorporated herein by reference and are filed as a part of this
report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

15

Hooker Furniture Corporation
Part III

In accordance with General Instruction G(3) of Form 10-K, the information called
for by Items 10, 11, 12 and 13 of Part III is incorporated by reference to the
registrant's definitive Proxy Statement for its Annual Meeting of Stockholders
scheduled to be held March 29, 2001, except for information concerning the
executive officers of the registrant which is included in Part I of this report
under the caption "Executive Officers of the Registrant."

Part IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Documents filed as part of this report on Form 10-K:
(1) The following financial statements are included in this report on Form 10-
K:

Report of Independent Certified Public Accountants.

Consolidated Balance Sheets as of November 30, 2000 and 1999.

Consolidated Statements of Income for each of the three fiscal years ended
November 30, 2000.

Consolidated Statements of Cash Flows for each of the three fiscal years
ended November 30, 2000.

Consolidated Statements of Stockholders' Equity for each of the three
fiscal years ended November 30, 2000.

Summary of Significant Accounting Policies.

Notes to Consolidated Financial Statements.

(2) Financial Statement Schedules:

Report on Financial Statement Schedule.

Schedule II - Valuation and Qualifying Accounts for each of the three
fiscal years ended November 30, 2000.

(b) The following reports on Form 8-K were filed by the registrant during the
last quarter covered by this report:

None.

(c) Exhibits:

3.1 Amended and Restated Articles of Incorporation of the Company (incorporated
by reference to Exhibit 3.1 to the Company's Registration Statement on Form
10 (Commission File No. 000-25349)).

16

3.2 Articles of Amendment to Amended and Restated Articles of Incorporation of
the Company (incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form 10 (Commission File No. 000-25349)).

3.3 Amended and Restated Bylaws of the Company (incorporated by reference to
Exhibit 3.3 to the Company's Registration Statement on Form 10 (Commission
File No. 000-25349)).

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

4.2 Articles of Amendment to Amended and Restated Articles of Incorporation of
the Company (See Exhibit 3.2).

4.3 Bylaws of the Company (See Exhibit 3.3).

4.4 Term Loan Agreement, dated September 18, 2000, between the Company and
Suntrust Bank (including related Term Note and Negative Pledge
Agreement). *

Pursuant to Regulation S-K, Item 601(b)(4)(iii), instruments evidencing
long-term debt less than 10% of the Company's total assets have been
omitted and will be furnished to the Securities and Exchange Commission
upon request.

10.1 Lease dated August 3, 2000, between International Home Furnishings Center
and the Company. *

10.2 Form of Salary Continuation Agreement (incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement on Form 10
(Commission File No. 000-25349)). **

10.3 Form of Split Dollar Agreement (incorporated by reference to Exhibit 10.4
to the Company's Registration Statement on Form 10 (Commission File No.
000-25349)). **

10.4 Commitment Letter for line of credit ("BB&T Line of Credit") and related
Promissory Note dated June 5, 1998 between Branch Banking & Trust Company
and the Company (incorporated by reference to Exhibit 10.4 of the
Company's Form 10-K (Commission File No. 000-25349) for the fiscal year
ended November 30, 1999).

10.5 Commitment Letter dated March 23, 1999 between Branch Banking & Trust
Company and the Company renewing the BB&T Line of Credit (incorporated by
reference to Exhibit 10.5 of the Company's Form 10-K (Commission File No.
000-25349) for the fiscal year ended November 30, 1999).

10.6 Term Loan Agreement, dated September 18, 2000, between the Company and
Suntrust Bank (including related Term Note and Negative Pledge Agreement)
(See Exhibit 4.4).

10.7 Credit Agreement, dated as of September 18, 2000, between the Company and
the Hooker Furniture Corporation Employee Stock Ownership Plan Trust
(including related Non-Recourse Promissory Note and Stock Pledge
Agreement). *

21 List of Subsidiaries
Triwood, Inc., a Virginia Corporation.

_________
*Filed herewith.
**Management contract or compensatory plan.

17

SIGNATURES

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

HOOKER FURNITURE CORPORATION

February 21, 2001
/s/ Paul B. Toms, Jr.
--------------------------------------------------
Paul B. Toms, Jr.
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signature Title Date

/s/ Paul B. Toms, Jr. Chairman, Chief Executive Officer and February 21, 2001
- --------------------------------- Director
Paul B. Toms, Jr. (Principal Executive Officer)

/s/ Douglas C. Williams President, Chief Operating Officer and
- --------------------------------- Director
Douglas C. Williams February 21, 2001

/s/ E. Larry Ryder Executive Vice President - Finance and February 21, 2001
- --------------------------------- Administration and Director
E. Larry Ryder (Principal Financial and Accounting Officer)

/s/ Henry P. Long, Jr. Senior Vice President - Merchandising and February 21, 2001
- --------------------------------- and Design and Director
Henry P. Long, Jr.

/s/ J. Clyde Hooker, Jr. Director and Chairman Emeritus February 21, 2001
- ---------------------------------
J. Clyde Hooker, Jr.

/s/ W. Christopher Beeler, Jr. Director February 21, 2001
- ---------------------------------
W. Christopher Beeler, Jr.

/s/ John L. Gregory III Director February 21, 2001
- ---------------------------------
John L. Gregory III

/s/ Irving M. Groves, Jr. Director February 21, 2001
- ---------------------------------
Irving M. Groves, Jr.

/s/ A. Frank Hooker, Jr. Director February 21, 2001
- ---------------------------------
A. Frank Hooker, Jr.

/s/ L. Dudley Walker Director February 21, 2001
- ---------------------------------
L. Dudley Walker

18

HOOKER FURNITURE CORPORATION AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

Financial Statements

Report of Independent Certified Public Accountants............................................. F-2

Consolidated Balance Sheets as of November 30, 2000 and 1999................................... F-3

Consolidated Statements of Income for each of the three fiscal years ended November 30, 2000... F-4

Consolidated Statements of Cash Flows for each of the three fiscal years ended
November 30, 2000.............................................................................. F-5

Consolidated Statements of Stockholders' Equity for each of the three fiscal years ended
November 30, 2000.............................................................................. F-6

Summary of Significant Accounting Policies..................................................... F-7

Notes to Consolidated Financial Statements..................................................... F-8

Financial Statement Schedules

Report on Financial Statement Schedule......................................................... S-1

Schedule II-Valuation and Qualifying Accounts for each of the three fiscal years
ended November 30, 2000........................................................................ S-2

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders of
Hooker Furniture Corporation and Subsidiary
Martinsville, Virginia

We have audited the accompanying consolidated balance sheets of Hooker Furniture
Corporation and subsidiary as of November 30, 2000 and 1999 and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended November 30, 2000. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Hooker Furniture
Corporation and subsidiary at November 30, 2000 and 1999, and the results of its
operations and its cash flows for each of the three years in the period ended
November 30, 2000 in conformity with generally accepted accounting principles.

/S/BDO Seidman, LLP
- -------------------

Richmond, Virginia
December 15, 2000

F-2

Consolidated
Balance Sheets (In thousands, including share data) Hooker Furniture
- --------------------------------------------------------------------------------
Corporation and Subsidiary
- --------------------------

As of November 30, 2000 1999
- -----------------------------------------------------------------------------------------------------------

Assets
- -----------------------------------------------------------------------------------------------------------

Current assets
Cash, primarily interest-bearing deposits......................... $ 1,243 $ 157
Trade receivables, less allowance of $610 and $525................ 31,019 26,599
Inventories....................................................... 42,785 37,051
Prepaid expenses and other........................................ 1,963 2,408
---------- ---------
Total current assets........................................ 77,010 66,215

Property, plant and equipment, net..................................... 48,767 45,138
Other assets........................................................... 7,754 5,070
---------- ---------
Total assets........................................................ $ 133,531 $ 116,423
========== =========

- ----------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- ----------------------------------------------------------------------------------------------------------

Current liabilities
Trade accounts payable............................................ $ 5,406 $ 3,776
Accrued salaries, wages and benefits.............................. 6,470 5,387
Other accrued expenses............................................ 2,884 2,495
Current maturities of long-term debt.............................. 1,581
---------- ---------
Total current liabilities.................................... 16,341 11,658

Long-term debt......................................................... 27,919 7,000
Deferred liabilities................................................... 3,300 2,402
---------- ---------
Total liabilities................................................. 47,560 21,060
---------- ---------

Common stock held by ESOP.............................................. 10,412 10,129

Stockholders' equity
Common stock, no par value, 10,000 shares authorized,
7,617 shares issued and outstanding............................ 2,605 2,418
Unearned ESOP shares (1,761 shares)............................... (22,009)
Retained earnings................................................. 94,963 82,816
---------- ---------
Total stockholders' equity.................................... 75,559 85,234
---------- ---------
Total liabilities and stockholders' equity.................... $ 133,531 $ 116,423
========== =========

See accompanying Summary of Significant Accounting Policies and Notes to
Financial Statements.

F-3

Consolidated
Statements of Income (In thousands, except per share data) Hooker Furniture
- ------------------------------------------------------------------------------
Corporation and Subsidiary
- --------------------------

For The Year Ended November 30, 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------

Net sales.................................................... $250,828 $228,803 $206,084

Cost of sales................................................ 188,143 171,175 158,137
-------- -------- --------

Gross profit.............................................. 62,685 57,628 47,947

Selling and administrative expenses.......................... 39,738 34,094 31,034
-------- -------- --------

Operating income.......................................... 22,947 23,534 16,913

Other income (expense), net.................................. (38) (358) 114
-------- -------- --------

Income before taxes....................................... 22,909 23,176 17,027

Income taxes................................................. 7,995 8,881 6,241
-------- -------- --------

Net income................................................ $ 14,914 $ 14,295 $ 10,786
======== ======== ========

Earnings per share:
Basic and diluted......................................... $ 2.06 $ 1.87 $ 1.40
======== ======== ========

Weighted average shares outstanding.......................... 7,257 7,636 7,692
======== ======== ========

See accompanying Summary of Significant Accounting Policies and Notes to
Financial Statements.

F-4

Consolidated
Statements of Cash Flows (In thousands) Hooker Furniture Corporation and Subsidiary
- ----------------------------------------------------------------------------------------------
For The Year Ended November 30, 2000 1999 1998
- ----------------------------------------------------------------------------------------------

Cash flows from operating activities:
Cash received from customers....................... $ 247,236 $ 226,185 $ 206,152
Cash paid to suppliers and employees............... (222,339) (203,062) (184,521)
Income taxes paid, net............................. (8,028) (9,288) (6,038)
Interest paid, net................................. (490) (570) (459)
--------- --------- ---------
Net cash provided by operating activities....... 16,379 13,265 15,134
--------- --------- ---------

Cash flows from investing activities:
Purchase of property, plant and equipment, net..... (12,008) (8,626) (11,486)
Acquisition of joint venture, net................. (801)
--------- --------- ---------
Net cash absorbed by investing activities....... (12,809) (8,626) (11,486)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from long-term debt....................... 41,000 4,738 6,877
Payments on long-term debt......................... (18,500) (9,800) (4,800)
Cash dividends paid................................ (2,484) (2,290) (2,152)
Purchase and retirement of common stock............ (755) (775)
Loan to ESOP for purchase of common stock.......... (22,500)
--------- --------- ---------
Net cash absorbed by financing activities........ (2,484) (8,107) (850)
--------- --------- ---------

Net increase (decrease) in cash........................ 1,086 (3,468) 2,798
Cash at beginning of year.............................. 157 3,625 827
--------- --------- ---------
Cash at end of year.................................... $ 1,243 $ 157 $ 3,625
========= ========= =========

Reconciliation of net income to net cash provided
by operating activities:

Net income............................................. $ 14,914 $ 14,295 $ 10,786
Depreciation and amortization...................... 6,689 4,988 4,900
Non-cash ESOP cost................................. 678
Loss on disposal of equipment...................... 111
Changes in assets and liabilities, net of effects
from acquisition:
Trade receivables.................................. (4,420) (3,253) (369)
Inventories........................................ (5,734) (1,239) (2,337)
Prepaid expenses and other assets.................. (18) (528) (853)
Trade accounts payable............................. 1,630 (981) 582
Other accrued expenses............................. 1,319 12 2,192
Deferred liabilities............................... 1,210 (29) 233
--------- --------- ---------
Net cash provided by operating activities.......... $ 16,379 $ 13,265 $ 15,134
========= ========= =========

See accompanying Summary of Significant Accounting Policies and Notes to
Financial Statements.

F-5

Consolidated Statements
Of Stockholders' Equity (In thousands, except per share data) Hooker Furniture Corporation and Subsidiary
- ------------------------------------------------------------------------------------------------------------
Unearned
Common Stock ESOP Retained
Shares Amount Shares Earnings

Balance at November 30, 1997...................... 7,730 $2,454 $63,756

Net income........................................ 10,786
Cash dividends on common stock ($0.28 per share).. (2,152)
Increase in fair value of shares held by ESOP..... (169)
Purchase and retirement of common stock........... (59) (19) (756)
----- ------ --------
Balance at November 30, 1998.................... 7,671 2,435 71,465

Net income........................................ 14,295
Cash dividends on common stock ($0.30 per share).. (2,290)
Decrease in fair value of shares held by ESOP..... 84
Purchase and retirement of common stock........... (54) (17) (738)
----- ------ --------
Balance at November 30, 1999.................... 7,617 2,418 82,816

Net income........................................ 14,914
Cash dividends on common stock ($0.34 per share).. (2,484)
Purchase of shares by ESOP........................ $(22,500)
ESOP cost......................................... 187 491
Increase in fair value of shares held by ESOP..... (283)
----- ------ -------- --------
Balance at November 30, 2000.................... 7,617 $2,605 $(22,009) $94,963
===== ====== ======== ========

See accompanying Summary of Significant Accounting Policies and Notes to
Financial Statements.

F-6

Summary of
Significant Accounting Policies Hooker Furniture Corporation and Subsidiary
- --------------------------------------------------------------------------------

Nature of Business
The Company manufactures and imports household and office furniture for sale to
wholesale and retail merchandisers located primarily throughout North America.
The Company operates predominantly in one business segment. Substantially all
revenues result from the sale of residential furniture products. Substantially
all of the Company's trade accounts receivable are due from retailers in this
market, which consists of a large number of entities with a broad geographical
dispersion.

Certain items in the financial statements for periods prior to 2000 have been
reclassified to conform to the 2000 method of presentation.

Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, Triwood. All material inter-company accounts and
transactions have been eliminated upon consolidation.

Inventories
Inventories are stated at the lower of cost, using the last-in, first-out (LIFO)
method, or market.

Property, Plant and Equipment
Property, plant and equipment is stated at cost, less allowances for
depreciation. Provision for depreciation has been computed (generally by the
declining balance method) at annual rates that will amortize the cost of the
depreciable assets over their estimated useful lives.

Income Taxes
Deferred income taxes reflect the future tax consequences of differences between
the tax basis of assets and liabilities and their financial reporting amounts at
each year end.

Fair Value of Financial Instruments
The carrying value for each of the Company's financial instruments (consisting
of cash, accounts receivable, accounts payable and accrued salaries)
approximates fair value because of the short-term nature of those instruments.
The fair value of the Company's industrial development revenue bonds and term
loan is estimated based on the quoted market rates for similar debt with
remaining maturity. At November 30, 2000, the carrying value of the industrial
revenue bonds and term loan approximated fair value.

Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reported period. Actual
results could differ from those estimates.

Revenue Recognition
Sales are recognized when products are shipped to customers. Substantially all
of the Companys trade accounts receivable are from customers in the retail
furniture industry. Management periodically performs credit evaluations of its
customers and generally does not require collateral. The Company uses credit
insurance to minimize the risk on certain accounts.

F-7

Summary Of Significant
Accounting Policies - Continued Hooker Furniture Corporation and Subsidiary
- --------------------------------------------------------------------------------

Long-Lived Assets
Long-lived assets, such as property, plant and equipment, are evaluated for
impairment when events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable through the estimated undiscounted
future cash flows from the use of those assets. When any such impairment
exists, the related assets will be written down to fair value. No impairment
losses have been recorded through November 30, 2000.

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 earnings of the Company. Unallocated ESOP shares
are not considered outstanding for purposes of calculating basic and diluted
earnings per share. At November 30, 2000, there were no securities that had a
dilutive effect. Earnings per share has been computed based upon the weighted
average number of common shares outstanding during the year.

Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statements of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"), which establishes accounting
and reporting standards for derivative instruments. SFAS 133 requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. In
June 2000, the FASB issued SFAS No. 138 Accounting for Derivative Instruments
and Hedging Activities ("SFAS 138"), an amendment of SFAS 133, addressing a
number of issues contained therein. SFAS 133 and SFAS 138 are effective for all
fiscal quarters of fiscal years beginning after June 15, 2000, and require
application prospectively. Management believes that the adoption of SFAS 133
and SFAS 138 will not have a material impact on the Company's financial
statements.

Notes To Consolidated Financial Statements
(Dollar amounts except per share amounts in tables or text, in thousands unless
- -------------------------------------------------------------------------------
otherwise indicated)
- --------------------

NOTE 1 - INVENTORIES
November 30,
2000 1999
Finished furniture...................... $38,408 $31,673
Furniture in process.................... 2,647 1,665
Materials and supplies.................. 12,883 13,244
------- -------
Inventories at FIFO................... 53,938 46,582
Reduction to LIFO basis................. 11,153 9,531
------- -------
Inventories........................... $42,785 $37,051
======= =======

If the first-in, first-out (FIFO) method had been used in valuing all
inventories, net income would have been $15,970, $14,459 and $11,357 for the
years ended November 30, 2000, 1999 and 1998, respectively.

F-8

Notes To Consolidated
Financial Statements - Continued Hooker Furniture Corporation and Subsidiary
- --------------------------------------------------------------------------------

NOTE 2 - PROPERTY, PLANT AND EQUIPMENT

Depreciable November 30,
Lives (In years) 2000 1999

Buildings........................................... 15 - 40 $ 43,285 $ 40,047
Machinery and equipment............................. 8 - 20 43,032 40,888
Furniture and fixtures.............................. 5 - 10 13,495 6,323
Other............................................... 3 - 30 2,927 5,894
-------- --------
Total depreciable property at cost................ 102,739 93,152
Accumulated depreciation............................ (55,258) (49,385)
-------- --------
Total depreciable property, net................... 47,481 43,767
Land................................................ 1,286 1,371
-------- --------
Property, plant and equipment, net................ $ 48,767 $ 45,138
======== ========

NOTE 3 - LONG-TERM DEBT

November 30,
2000 1999

Term loan, variable rate (7.0% at November 30, 2000) unsecured, interest
and principal payable quarterly............................................. $ 22,500
Industrial development revenue bonds issued in 1996, secured by a $7 million
letter of credit, maturing annually from 2004 through 2006 with a variable
interest rate (4.4% at November 30, 2000)................................... 7,000 $ 7,000
-------- --------
29,500 7,000
Less current maturities........................................................ 1,581
-------- --------
Long-term debt.............................................................. $ 27,919 $ 7,000
======== ========

The Company has entered into interest rate swap agreements effectively providing
a fixed interest rate of 4.71% on the industrial development revenue bonds
through 2006, and 7.4% on the term loan through 2010. The notional principal
values of the agreements are equal to the outstanding long-term debt balances.
Differences between amounts paid and amounts received under the contracts are
recognized in interest expense.

Annual debt service requirements are $1.6 million in 2001, $1.7 million in 2002,
$1.8 million in 2003, $4.4 million in 2004, and $4.5 million in 2005.

The debt instruments contain, among other things, certain restrictions as to
minimum tangible net worth, net equity ratio, current ratio, and debt coverage
ratio. The Company was in compliance with these restrictions as of November 30,
2000.

The Company has aggregate available lines of credit of $25.0 million to fund
its working capital needs as necessary, including an unsecured revolving line of
credit that provides for borrowings of up to $10 million, at a variable interest
rate (7.1% at November 30, 2000). The Company utilizes letters of credit issued
against its lines of credit to collateralize imported inventory purchases.
Outstanding letters of credit at November 30, 2000 were $6.0 million. As of
November 30, 2000, $19.0 million of additional borrowings were available under
these lines of credit.

F-9

Notes To Consolidated
Financial Statements - Continued Hooker Furniture Corporation and Subsidiary
- --------------------------------------------------------------------------------

NOTE 4 - EMPLOYEE BENEFIT PLANS

Salary Continuation Agreements

The Company maintains a salary continuation plan for certain management
employees. These are un-funded agreements with all benefits paid out of the
general assets of the Company when the employee retires. The amount of benefits
to be paid is specified in each individual agreement. The accrued liabilities
relating to this plan of $2.4 million and $2.3 million at November 30, 2000 and
1999, respectively, are included in "accrued salaries, wages and benefits" and
"deferred liabilities." The cost of the plan recognized in the statements of
income was $302 in 2000, $406 in 1999 and $218 in 1998.

Employee Stock Ownership Plan

The Company sponsors an employee stock ownership plan (the "ESOP") to provide
retirement benefits for eligible employees by allowing them to share on a
noncontributory basis in the growth of the Company, and allowing them to
accumulate a beneficial ownership interest in the common stock of the Company.
The ESOP covers substantially all employees.

Shares contributed to the ESOP are valued at fair market value as determined by
an independent appraisal. Dividends paid on allocated shares held by the ESOP
are charged to retained earnings. The Company is obligated under certain
circumstances to repurchase shares held by the ESOP. Therefore the estimated
value of the allocated ESOP shares is classified as "common stock held by ESOP"
outside of stockholders' equity.

In September 2000, the ESOP completed a tender offer for 1.8 million shares of
the Company's common stock at a price of $12.50 per share. In connection with
the tender offer, the Company borrowed $22.5 million under a 10-year term loan,
at an effective interest rate of approximately 7.4% per annum, and loaned the
proceeds to the ESOP. The ESOP will repay the loan (the "ESOP loan") to the
Company over a 25-year period with interest at 8.0% from dividends and employer
contributions to the ESOP. The unamortized cost of the ESOP is reported in the
balance sheet as "unearned ESOP shares". The Company will release shares to
eligible employees over the 25-year period based on the annual principal and
interest payments made by the ESOP on the ESOP Loan. Compensation expense is
recorded for shares "committed to be released" to employees based on fair market
value. The fair market value of unallocated shares at November 30, 2000 was
$30.4 million. Through November 30, 2000, 603,583 shares were allocated to
participants. The cost of the ESOP, including cash contributions and the fair
market value of shares released, amounted to $1,187 in 2000, $798 in 1999, and
$725 in 1998.

Employee Savings Plan

The Company sponsors the Employee's Savings Plan (the "Plan") covering
substantially all employees. The Plan is a qualified 401(k) savings plan that
is designed to permit employees of the Company to meet their savings goals and
provide them with funds for retirement. A participant in the Plan may
contribute an amount not less than 1%, nor more than 16% of their compensation.
The Company will contribute 50% of the amount contributed by the participant, up
to 6% of their compensation, as a matching contribution. Contributions to the
Plan by the Company amounted to $675 in 2000, $667 in 1999 and $571 in 1998.

F-10

Notes To Consolidated
Financial Statements - Continued Hooker Furniture Corporation and Subsidiary
- --------------------------------------------------------------------------------

NOTE 5 - INCOME TAXES

The provision for income taxes: For The Years Ended November 30,
2000 1999 1998
Federal.............................. $7,085 $ 7,917 $ 5,483
State................................ 910 964 758
------ ------- ---------
Total............................ $7,995 $ 8,881 $ 6,241
====== ======= =========

Deferred income tax assets (liabilities): November 30,
2000 1999
Assets
Deferred compensation................. $ 929 $ 869
Inventory............................. 103 90
Investment in 50% owned subsidiary.... 217
Allowance for bad debts............... 115
Employee benefits..................... 143
Other................................. 150 109
------- ---------
Total deferred tax assets......... 1,440 1,285
------- ---------

Liabilities
Property.............................. (2,342) (1,445)
Allowance for bad debts............... (35)
Other................................. (75)
------- ---------
Total deferred tax liabilities.... (2,417) (1,480)
------- ---------
Net deferred tax liability................. $ (977) $ (195)
======= =========

The net deferred tax liability is included in the balance sheets under "deferred
liabilities."

The effective tax rate on income before taxes differed from the federal
statutory tax rate. The following table reconciles the federal statutory rate
with the effective rate:

For The Years Ended November 30,
2000 1999 1998

Income taxes at statutory rate............................... 35.0% 35.0% 35.0%
Increase (decrease) in tax rate resulting from:
State taxes, net of federal benefit...................... 2.6 2.7 2.5
Federal tax rate differential due to lower tax brackets.. (0.2)
Other.................................................... (2.7) 0.6 (0.7)
---- ---- ----
Effective income tax rate............................. 34.9% 38.3% 36.6%
==== ==== ====

NOTE 6 - INVESTMENT IN SUBSIDIARY

On June 30, 2000, the Company acquired all of the outstanding shares of Triwood,
Inc. ("Triwood"), a joint venture in which the Company had been a 50%
shareholder, for an aggregate consideration of $1.9 million. Triwood formerly
produced particleboard for furniture manufacturing. During 1998, the joint
venture was cited by the Environmental Protection Agency ("EPA") for a violation
of certain regulations under the Clean Air Act Amendments of 1990. The joint

F-11

Notes To Consolidated
Financial Statements - Continued Hooker Furniture Corporation and Subsidiary
- --------------------------------------------------------------------------------

venture members determined that the cost of modification to the plant to come
into compliance, together with other needed capital improvements, would be
prohibitive and the joint venture elected to cease operations in November 1998.
The purchase price includes the assumption of the first $100,000 of liability,
if any, related to the 1998 EPA citation. Pursuant to an indemnification
agreement, the two joint venture members will share equally, any liability in
excess of $100,000. Based upon its most recent information, management does not
believe the liability, if any, will be material to the consolidated financial
statements.

The acquisition has been accounted for using the purchase method of accounting,
and, accordingly, the purchase price, which approximated the fair values of net
assets acquired, has been allocated to the assets purchased (primarily land,
building, and deferred tax assets) and the liabilities assumed based upon their
fair values at the date of acquisition. Prior to the acquisition, the joint
venture had been accounted for by the equity method. At November 30, 1999 the
Company's net realizable value of its investment in the joint venture of $2.1
million was included on "other assets". Subsequent to the acquisition the
Company has operated its import furniture business as a wholly-owned subsidiary
through Triwood.

Effective June 1, 1999, the joint venture entered into a lease for the land and
building owned by the joint venture with a third party lessee. The lease term
is for two years with an option to purchase for $2.7 million. The option was
exercised on November 30, 2000 and the sale is scheduled to close prior to May
31, 2001.

NOTE 7 - COMMON STOCK

Subsequent to November 30, 1999, the Board of Directors approved a two-for-one
stock split, effected in the form of a 100% stock dividend. The record date for
the split was January 10, 2000, and the dividend was distributed to stockholders
on January 31, 2000. All share and per share data in the financial statements
has been adjusted to reflect the split.

NOTE 8 - QUARTERLY DATA (Unaudited)
Fiscal Quarter
First Second Third Fourth
2000
Net sales............................. $ 56,624 $ 66,399 $ 61,576 $ 66,229
Gross profit.......................... 14,115 17,203 16,237 15,130
Net income............................ 3,169 4,434 4,129 3,182
Basic and diluted earnings per share.. 0.42 0.58 0.54 0.52

1999
Net sales............................. $ 52,789 $ 59,589 $ 54,577 $ 61,848
Gross profit.......................... 13,390 15,297 13,255 15,686
Net income............................ 3,386 4,080 3,082 3,747
Basic and diluted earnings per share.. 0.44 0.53 0.40 0.49

The quarterly data reflects the effect of certain reclassification adjustments
made between "net sales", "cost of sales", and "selling and administrative
expenses" to conform with the current method of presentation.

Earnings per share for each quarter is derived using the weighted average effect
of shares outstanding during the quarter. Earnings per share for the year
reflects the weighted average effect of shares outstanding on an annual basis.
Consequently, the sum of earnings per share for the quarters may not equal
earnings per share for the full year.

F-12

REPORT ON FINANCIAL STATEMENT SCHEDULE

The audits referred to in our report dated December 15, 2000, relating to the
consolidated financial statements of Hooker Furniture Corporation and
Subsidiary, which are contained in Item 8 of this Form 10-K included the audits
of the financial statement schedule listed in the accompanying index. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statement schedule
based upon our audits.

In our opinion such financial statement schedule presents fairly, in all
material respects, the information set forth therein.

/S/BDO Seidman, LLP

Richmond, Virginia
December 15, 2000

S-1

HOOKER FURNITURE CORPORATION AND SUBSIDIARY
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS (In thousands)
For Each of the Three Fiscal Years Ended November 30, 2000

Balance at Charged to Balance
Beginning Costs and at End of
Year Description of Period Expenses Deductions (1) Period

2000 Allowance for doubtful accounts............... $525 $736 $651 $610

1999 Allowance for doubtful accounts............... 500 387 362 525

1998 Allowance for doubtful accounts............... 500 353 353 500

(1) Uncollectible receivables written off, net of recoveries.

S-2

EXHIBIT INDEX

Exhibit Description
- ------- -----------

3.1 Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form 10 (Commission File No. 000-25349)).

3.2 Articles of Amendment to Amended and Restated Articles of
Incorporation of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form 10 (Commission
File No. 000-25349)).

3.3 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.3 to the Company's Registration Statement on
Form 10 (Commission File No. 000-25349)).

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

4.2 Articles of Amendment to Amended and Restated Articles of
Incorporation of the Company (See Exhibit 3.2).

4.3 Bylaws of the Company (See Exhibit 3.3).

4.4 Term Loan Agreement, dated September 18, 2000, between the Company
and Suntrust Bank (including related Term Note and Negative Pledge
Agreement). *

Pursuant to Regulation S-K, Item 601(b)(4)(iii), instruments
evidencing long-term debt less than 10% of the Company's total
assets have been omitted and will be furnished to the Securities and
Exchange Commission upon request.

10.1 Lease dated August 3, 2000, between International Home Furnishings
Center and the Company. *

10.2 Form of Salary Continuation Agreement (incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement on Form 10
(Commission File No. 000-25349)). **

10.3 Form of Split Dollar Agreement (incorporated by reference to Exhibit
10.4 to the Company's Registration Statement on Form 10 (Commission
File No. 000-25349)). **

10.4 Commitment Letter for line of credit ("BB&T Line of Credit") and
related Promissory Note dated June 5, 1998 between Branch Banking &
Trust Company and the Company (incorporated by reference to Exhibit
10.4 of the Company's Form 10-K (Commission File No. 000-25349) for
the fiscal year ended November 30, 1999).

10.5 Commitment Letter dated March 23, 1999 between Branch Banking &
Trust Company and the Company renewing the BB&T Line of Credit
(incorporated by reference to Exhibit 10.5 of the Company's Form
10-K (Commission File No. 000-25349) for the fiscal year ended
November 30, 1999).

10.6 Term Loan Agreement, dated September 18, 2000, between the Company
and Suntrust Bank (including related Term Note and Negative Pledge
Agreement) (See Exhibit 4.4).

10.7 Credit Agreement, dated as of September 18, 2000, between the
Company and the Hooker Furniture Corporation Employee Stock
Ownership Plan Trust (including related Non-Recourse Promissory Note
and Stock Pledge Agreement). *

21 List of Subsidiaries
Triwood, Inc., a Virginia Corporation.

_________
*Filed herewith.
**Management contract or compensatory plan.