Accounting Annual Report Project Essay Sample

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A. Introduction
Hooker Furniture Corporation is a growing furniture company in today’s industry and current economic circumstances. This company was incorporated in Virginia in 1924, and is ranked among the nation’s largest publicly top 10 furniture sources. Paul B. Toms Jr. has been Chairman and Chief Executive Officer for Hooker Furniture Corporation since 2000 and has also been with the company since 1983. The Hooker Furniture Corporation home office is located in Martinsville, VA. This company offers wood furniture, metal furniture, and upholstered furniture products. Including home entertainment, home office, accent, dining, bedroom, and bath furniture under the Hooker furniture brand. They also offer youth furniture under the Opus Designs by Hooker Brand. The Hooker Furniture Corporation’s principal customers consist of retailers of residential home furnishings that are broadly dispersed throughout the United States. Their customers also include home furniture retailers in Canada and in more than 20 other countries internationally.

Meaning the main geographic area of activity is worldwide. Hooker Furniture Corporation’s fiscal years end on the Sunday closest to January 31, meaning the 2013 fiscal year ended on February 3, 2013 and 2013 ended up being a 53-week fiscal year. In management’s report on internal control over financial reporting, it is said that KPMG LLP is the Company’s only independent registered public accounting firm. In the two letters written by two separate auditors from KPMG LLP to Hooker Furniture Corporation, it is concluded by both auditors that the Company’s internal control over financial reporting was effective as of February 3, 2013 at the end of the 2013 fiscal year.

These two auditors also have audited, in accordance with the standards of the Public Company Accounting Oversight Board and have concluded that all of their financial statements such as balance sheet, income statement, statement of cash flows, etc. have checked out perfectly and everything has been reported fairly. Meaning the auditors opinions on the company were good. Hooker Furniture Corporation is a part of the NASDAQ in the Stock Market. As of April 15, 2014 Hooker Furniture Corporation’s stock is worth $14.10 a share, meaning their stock has decreased per share by $0.56 or (3.82%) since the day before. For fiscal 2013 the company has had to pay stockholders $0.10 per share in dividends each quarter throughout the whole year. Meaning the price per share for paid dividends has stayed the same each quarter throughout fiscal 2013. B. Company Situation

The Hooker furniture Corporation has been around since 1924, so they have had their ups and downs as a company over the years. In their message to the shareholders and in management’s discussion and analysis, it was basically stating that in the last several annual reports they have outlined investments they have been making in new products, processes, and people, even as they have faced the harsh economic conditions of the Great Recession. In conclusion to that both of those documents were basically saying even though it has been a battle during the Great Recession because of the housing market being, we are still making decisions to move forward and grow as a company. Also in moving forward as a business, the company has had some significant changes in the employee base. They have a new designer and engineer for the Homeware product line position and a new Vice President of Corporate Marketing.

Also joining the company is Bill Reece, a trailblazer in sourcing furniture in Asia for the U.S. market. In the statement to shareholders it stated that casegoods division finished the year very strong but had a slow start to the 2013 fiscal year. But this was because as the company has migrated casegoods production from suppliers in China to new suppliers in Vietnam and Indonesia and this has disrupted the supply chain, causing lower sales during the first half of the fiscal year. This difficult transition for the company was necessary for the long term-term cost and competitiveness, and it also complements their relationship with their main long-term supplier in China. On the other hand as for the Company’s domestic upholstery division, it proved to be the most significant positive impact with having strong sales growth and profitability.

As a result consolidated net income increased by $3.6 million or (70.6%) over the prior year even though a 2% lower net sales, due to the company transition. In conclusion to reading both the message to shareholders and management’s discussion and analysis, the current situation and the outlook for the future are very good in my opinion. This company may have had a slow start in the casegoods sales for example and the current situation may have suffered a little but the first part of the fiscal 2013 year. But they were looking to the future and making their transition in that area, for more efficiency in the future and picked up sales the second half of the year. They also made up for this transition with over a 70% increase in there upholstery division sales. The Outlook that Hooker Furniture Corporation is great, they are making new business deals and making employee transitions to help them make it through the Great Recession as the housing market goes back up. C. Financial Statements

Hooker Furniture Corporation uses a multi-step format for what they call the Statement of Income (Income Statement). When looking at the company’s multi-step income statement we will be looking at 3 major aspects: net sales, gross profit, and operating income. Net sales for the company experienced a decrease of $6,863 or (-4.6%) in casegoods sales, an increase of $2,717 or (3.6%) in upholstery sales, and a decrease of $4,146 or (-1.9%) over all for consolidated net sales. While the upholstery net sales increased from the prior year because of the increasing average selling prices, casegoods net sales drove down the overall consolidated net sales. Casegoods drove down consolidated net sales due to the overly-aggressive inventory reductions because of the vendor shifting from China to other Asian countries, resulting in the delay of several well-placed new casegoods collections and negatively impacting fiscal 2013 for the first six months sales. Gross profit for the company experienced an increase of $3,683 or (7.5%) fiscal 2013, compared to the numbers from fiscal 2012.

Consolidated gross margin increased primarily due to decreased discounting in both the casegoods and upholstery segments, and lower domestic upholstery manufacturing costs as a percentage of net sales. This partially offset the higher cost on some of the imported products for the company. Hooker Furniture Corporation almost double operating income fiscal 2013, compared to last year’s numbers fiscal 2012. Consolidated operating income witnessed a huge increase of $6,267 or (93.9%) from last year’s numbers. During, the fourth quarter of fiscal 2012, the upholstery segment recorded a non-cash charge of $1.8 million to write-down the value of the Bradington-Young trade name. After this the upholstery segment has returned to operating profitability, due to operational improvements and the non-recurrence of intangible asset impairment charges fiscal 2013.

As of for the Balance Sheet of Hooker Furniture Corporation fiscal 2013 is a little different from fiscal 2012. Fiscal 2013 had Liabilities of $24,778 + Stockholders’ Equity of $131,045 = Assets of $155,823. Whereas fiscal 2012 had Liabilities of $22,058 + Stockholders’ Equity of $127,113 = Assets of $149,171. Making a $6,652 difference between fiscal 2013 and fiscal 2012 on the Balance Sheet.

The Statement of Cash Flows for the Hooker Furniture Corporation indicates that the company is expanding through investing activities. Over all we see in the Statement of Cash Flows that in fiscal 2013 there was more investing activities going on because there is more cash in fiscal 2012. To conclude on the Statement of Cash Flows for this company, we see complete negative numbers for fiscal 2013 meaning cash decreased because of the investing activities, whereas in fiscal 2012 we see positive numbers in the end and there has been a cash increase. D. Accounting Policies

Generally Accepted Accounting Principles requires that the financial statements include a Summary of Significant Accounting Principles. In the Hooker Furniture Corporation’s Summary of Significant Accounting Principles, we are going to focus on and explain five main topics: Cash and Cash Equivalents, Trade Accounts Receivable, Intangible Assets, Revenue Recognition, and Advertising. As for cash and cash equivalents this company temporarily invests unused cash balances in a high quality money market fund that provides daily liquidity and pays dividends monthly. Also cash equivalents are stated at cost plus accrued interest, which approximates fair value. The trade accounts receivables for this company come from retailers and dealers from all over the world that sell residential home furnishings. They continually perform credit evaluations of all customers pertaining to trade accounts receivables and do not require any collateral from these customers. Intangible Assets for Hooker Furniture Corporation pertain more to the upholstery segment.

The fair value of the company’s indefinite-lived intangible assets is determined based on the estimated earnings and cash flow capacity of those assets. The impairment test for intangible assets consist of a comparison of the fair value of the indefinite-lived intangible assets with their carrying amount. Also if you are exceeding the fair value of the indefinite-lived intangible assets, an impairment loss will be recognized in the amount equal to the excess. Revenue recognition for Hooker Furniture Corporation, sales are recorded as net of allowances for trade, estimated product returns, and rebate advertising programs. When the title and risk pass to the customer sales revenue is recognized, and in some the title does not pass until the shipment is delivered to the customer.

In concluding with the 5th topic for Hooker Furniture Corporations Significant Accounting Principles. Advertising is offered in programs to qualified dealers, in which the company will provide signs, catalogs, and other marketing items to support their customers. The cost of these programs for the customers will not exceed the fair value of the benefit received. For fiscal 2013, 2012, and 2011 advertising cost charged to selling administrative expense totaled to $2.3 million, $2.2 million, and $2.4 million. Cost for the arrangements are expensed as incurred and are netted against revenues in the last consolidated statements of operations and comprehensive income. The costs for other advertising allowance programs are charged against net sales.

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