Greetings, ladies and gentlemen and welcome to Hooker Furniture’s quarterly investor conference call reporting its operating results for the fiscal first quarter 2009. (Operator Instructions) It is now my pleasure to introduce your host, Mr. Larry Ryder, Executive Vice President of Finance and Administration and CFO. Mr. Ryder, please go ahead.

Thank you, Stacy. Good morning and welcome to our quarterly conference call to review our fiscal 2009 first quarter sales and earnings. We appreciate your participation this morning. Joining me today is Paul Toms, our Chairman, President, and CEO. During this morning’s call, we are comparing our operating results for the 13 week first quarter of fiscal year 2009 that began February 4, 2008 and ended May 4, 2008, to the fiscal year 2008 first quarter that began January 29, 2007 and ended April 29, 2007. During our call today, we may make forward-looking statements which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management’s expectations is contained in our SEC filings and the press release announcing our first quarter 2009 results. Any forward-looking statement speaks only as of today and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after today’s call. Now let’s get underway with some opening comments from Paul.

Thanks, Larry and good morning, everyone. As we stated in our press release last night, we are not happy to be reporting profitability performance for the first quarter that’s below what we have achieved recently and what we believe we will be able to achieve again, once we return to a better economic environment. As we reported, net sales of $71 million and net income of $2.6 million decreased by 8.1% and 39.2% respectively from the same period a year ago. We remain confident in our business model, which proves itself during extremely challenging economic and industry conditions last year. As we also referenced in the press release, we believe we are making progress on multiple operational initiatives to further improve our efficiency and service to our customers. We are continuing to invest in our business because while the economic malaise has been prolonged, we believe it is temporary. It is also critical at this time to seize every opportunity to work with our retailers to stimulate demand while simultaneously looking for ways to reduce costs without compromising either product quality or service. Before we get into the specifics of the quarter, I would like to highlight a few details on some key initiatives, investments, and efforts presently underway to stimulate sales at Hooker, efforts that we believe will pay dividend when demand improves. First, we have several projects underway in warehousing and distribution. By the end of this month, we expect to open a second Asian warehouse in conjunction with our second-largest source plan. This will allow more of our customers to purchase a greater variety of our products at lower prices, thus enhancing their opportunities to increase profit margins. The West Coast distribution center in Carson, California that we opened in early February this year has been well-received…

Thank you, Paul. As Paul stated, we are disappointed by our decline in sales and profit, even in this tough economic environment. We do, however, still strongly believe that we have established the right business model and believe we are working on the right initiatives to further refine our business model, positioning us well when business conditions improve. We believe our inventory position is appropriate for the current business conditions and we have maintained a very strong cash position. During fiscal 2009 first quarter, we generated $8.7 million in cash flow from operations, which was used to increase our cash and cash equivalents by $5.6 million since the end of fiscal 2008 and to pay $1.2 million in dividends to shareholders. Also, we used cash of $856,000 to repurchase approximately 43,000 shares of the company’s stock. We pay $655,000 for a scheduled principal payment on the company’s term loan and invested $473,000 in capital improvements. The company ended fiscal 2009 first quarter with $38.7 million in cash and cash equivalents, which compares to $33.1 million at the end of the 2008 fiscal year. Inventories were $42.3 million, excluding $3.8 million of Sam Moore inventory at the end of the fiscal 2009 first quarter, an 8.8% decrease from $46.4 million at the end of the 2008 fiscal year. Our continued progress in forecasting logistics and supply chain management have allowed us to decrease our inventories to what we believe are optimum levels under the current business conditions. In May 2008, a powerful earthquake struck central China. While China is a major source of supply for many of our company’s imported products, none of the company’s suppliers is located in the affected area. There’s been no disruption in the supply of the company’s imported products from China. At the end of fiscal…

(Operator Instructions) We’ll go first to Matt McCall with BB&T Capital Markets. Analyst for Matthew S. McCall - BB&T Capital Markets: Good morning. This is actually Sean Connor for Matt. The main question we’ve got is trying to understand the SG&A line. In trying to compare this quarter basically to the last year period, and even really Q2 when you had Sam Moore and even a closer top line, I think the comment on the Q2 call was that that 10%-ish operating margin range was -- could be sustainable in a similar demand environment to an improving demand environment, and I’m comparing Q2 to this period. You’ve only got $2 million off the top line but the operating margin almost halved. Can you help us explain what the difference is in the SG&A picture in this quarter versus Q2, and even the year ago, excluding -- because Q2 already had Sam Moore involved?

Sean, I haven’t had a chance to compare this with Q2 of last year, so it’s a little bit difficult for me to answer this but I will say that in the first quarter this year, there were some one-time charges that did enter into SG&A, and I think it’s important to point out that it’s dangerous to start talking about one-time charges because it seems like there’s one-time charges all the time. But in this particular case, we had some start-up costs in terms of photography and advertising, for example, for Opus. We had some costs that were incurred as a result of the start-up of our California warehouse operation that of course weren’t in there in either the first or second quarter of last year. Because of the fact that if you’ll recall the first quarter a year ago, we had just come out of the transition period and as a result, some of the year-end costs, for example, auditing costs and that sort of thing in professional services, were incurred in the transition period where this year they are incurred in the first quarter following our year-end. So there’s several things in there and those expenses are not small expenses that were incurred in this quarter that shouldn’t recur in second quarter this year, but do make a little bit of difference when comparing first quarter last year or second quarter last year with this year. Analyst for Matthew S. McCall - BB&T Capital Markets: Okay. Do you guys still believe that that 9% to 10% margin range is possible at a mid-$70 million top line, or do you need to get above that to get to that level again?

I think what we said last year in the third and fourth quarters is that we felt like we could continue to operate at that level of profitability as long as demand stayed constant, and I think we were in the high 70s, $80 million range and I don’t think at this level, without taking costs out which we will do some of that but I think we need for demand to improve somewhat from the current levels. But I think mid to high $70 millions should help us and I still believe that at those levels we can attain that operating profit margin. Analyst for Matthew S. McCall - BB&T Capital Markets: Just some brief comments on the demand environment, a lot of the comment is status quo -- it’s not getting better, it’s not getting worse. Does that still hold with what you guys are seeing now? I know we are still seeing declines in rates and we’re still declines on the top line but I guess the Q4 comp on a daily basis versus the [stub] period seemed like we saw a modest increase and now we are looking at an 18% organic decline. Is there anything I guess in the pace of orders in the first quarter, or even into what you guys have seen so far this quarter that suggests that the demand is still getting worse, or is it leveling off? Obviously it’s not getting any better from your comments.

I think demand has been worse the last couple of quarters than it was last year. I don’t know that I see it deteriorating further, although we are in the absolute slowest part of the year traditionally for us. The summer is always our weakest quarter for demand and I certainly don’t see anything that’s going to change that this year. But I think conditions have deteriorated. We’ve had housing challenges for over a year, year-and-a-half now but I think the price of oil an energy and food prices and now unemployment going up that all of those things continue to impact consumer confidence, which is at the lowest levels in what, 20-plus years. So I do think demand has -- the environment has deteriorated further over the last couple of quarters and I don’t see any change this summer. We’re hopeful that in the fall it will improve slightly, part just seasonality and I think the other thing maybe to look at in our numbers, and we try to talk about the demand for Hooker imports and Bradington-Young excluding Sam Moore, which wasn’t there a year ago in the first quarter and also excluding our domestically produced wood furniture, which isn’t a going forward business. If you look at that, our volume was down about 10% in those businesses in the first quarter of this year and I think orders probably comparable to that for those ongoing businesses. Also, I think we said in the press -- in the conference call earlier that our business sequentially first quarter this year versus fourth quarter last year, orders were down but they were down slightly by 1% or 2%. Analyst for Matthew S. McCall - BB&T Capital Markets: I do remember you saying that. Could you comment a little bit more on the national account initiative? Are you guys starting to see I guess the top line benefit of that yet? Or just the planning and the development of it? And I think you commented last quarter that currently your national account business is roughly 5% of your overall revenue. Once that really starts to get going, is it possible for that to double as a percent of your revenue this year to maybe 10% of overall?

I don’t think it will increase that significantly this year and part of the reason is that we have made progress and we’ve got probably $6 million or $7 million in business that we have booked for this fall, probably third quarter with some of these new national accounts but you offset that with some attrition in existing business and I don’t know that that’s all going to be -- I mean, it’s incremental but it’s going to be offset some by deteriorating business maybe with existing accounts, so we are making progress and I think that at this point, there have been a few shipments to large new customers but I would say the full impact of that will start to occur in the third quarter and then how much impact will those new placements have this year? You’ll get the floor sample impact and maybe a reorder or two, but I think hopefully a full year in the next fiscal year we would see the benefit and hopefully we’re just getting our way onto these floors and into the catalogs and having a chance to leverage an additional business if these initial placements perform well. Analyst for Matthew S. McCall - BB&T Capital Markets: You mentioned the new warehouses and distribution centers that you guys are looking at this year, the new one in China and then the one adjacent to your Opus Design center. Any estimated costs on what that might -- what we could expect there?

I don’t think we have that information to share with you today. The one in Opus Designs is still in the planning stage, so I can’t say that we’ve finalized costs and the one that’s attached to our second-largest warehouse, there is -- it’s a $50,000 square foot facility that was already part of their space but there is cost to rent the space and have a third-party operate the warehouse. I think that hopefully the costs will be offset by the increased volume that mix containers would offer coming out of those plans, and we’ll ship some of our business from one at a time out of our warehouses in the East or West Coast here but the profitability should be fairly comparable. Analyst for Matthew S. McCall - BB&T Capital Markets: The ’09 CapEx estimate, is it still about $4.3 million?

Yes, in that range; I think $4 million to $6 million is what we said for the year, yes. Analyst for Matthew S. McCall - BB&T Capital Markets: All right, great. Thank you very much.

We’ll go next to Todd Schwartzman with Sidoti & Company. Todd Schwartzman - Sidoti & Company: Just so I understand your comments on the SG&A for the quarter for Q1, what were -- approximately what were the photography and advertising costs for Opus? And also the California warehouse related expense for the quarter, and did those dissipate to zero essentially in the current quarter?

I can comment on the Opus photography and printing and catalog costs, and they were significant -- several hundred thousand dollars to bring them up to the standards that we try to [present in our line]. And I think they are for the most part one-time. For instance, the Opus line is probably nine or ten groups presently and we’ve re-photographed and re-cataloged most of those groups. Typically we would bring out one or two groups per market, so we really look at that as more of a one-time investment in the business, just like updating the showroom and presenting an area to display their products is. So that should not be recurring. The warehousing costs in California, I think the cost we’ve seen to operate the warehouse in this quarter is probably consistent with what we will see going forward. There was some probably one-time charges early on just getting the warehouse ready and shipping some product in there, some of it from our East Coast warehouses to make sure that when we opened it, we would have a full complement of our products and hopefully going forward we won’t be incurring the freight from east to west, and we’ll be bringing everything from Asia into that warehouse.

On the audit charges that I alluded to, Todd, our proxy points out the costs that we incur from our auditors, KP&G, and that’s in total last year was about $750,000, in that range. A good portion of that was incurred in the first quarter of this year. Todd Schwartzman - Sidoti & Company: So that’s a timing issue?

Yes, it is. Todd Schwartzman - Sidoti & Company: Okay. And Larry, you had commented as to your reluctance to talk to one-time charges in that there is always something. Is there anything of a non-recurring nature that we should maybe expect for Q2 that you guys have not discussed as yet?

I’m not aware of anything at this time, Todd, that’s in place that should be a large, non-recurring item the second quarter but that can change, obviously.

We will have the costs for operating the warehouse that we talked about in Asia, although we’ve just closed a similar sized facility here, so maybe a little bit of incremental costs but nothing significant. Todd Schwartzman - Sidoti & Company: And for Q1, what were bad debt expense and interest expense?

Give me just a second -- about $100,000 in bad debt expense for the quarter. Todd Schwartzman - Sidoti & Company: And how did that differ from last year?

260 last year. Actually, our receivables look pretty good right now, pretty normal and considering the environment we’re in, we’re pleased with that. Obviously the bad debt speaks for itself but aging is very similar to what we’ve been experiencing in the past. Todd Schwartzman - Sidoti & Company: Okay. And gross interest expense, ballpark?

136 interest expense for the quarter, compared to a slight credit the previous year. Todd Schwartzman - Sidoti & Company: I just wanted to go back to the SG&A for a moment. Of the $1.3 million year-over-year increase, how much of that was Sam Moore responsible for?

[Maybe $1.4 million] in selling and administrative in the quarter. Of course, there’s volume that that’s attached to also.

Sam Moore was about $1.8 million, the added in the first quarter that wasn’t there in the first quarter of last year and the total increase, the net increase for the quarter in SG&A was 1.3. Todd Schwartzman - Sidoti & Company: So Sam Moore accounted for more than 100% of the year-over-year increase, yet there were other items that also were not present a year ago? I’m having some difficult reconciling.

First of all, you’re correct; if you excluded Sam Moore from the selling and administrative, then dollars went down, but volume was down also excluded Sam Moore and you’ve got some things that directly relate to volume, like sales commissions. But we also -- we had some of the items Larry talked about that occurred at Hooker and Bradington-Young this year that didn’t occur last year and then we had a few things that went the other way. For instance, we probably have three less warehouses in the first quarter this year, East Coast domestic warehouses than we had a year ago as we reduced our inventory levels and our warehousing footprint. In dollars, selling expenses for Hooker came down but as a percent of sales, they went up, as volume came down at a higher percentage than selling and costs came down. Todd Schwartzman - Sidoti & Company: Got it. As far as your upholstery plants, what kind of work schedules now are you running?

Both of them are operating at less than full capacity and they have different work schedules at the two divisions. At Bradington-Young, we’re working about three out of every four weeks, so we are taking about a week a month down. Sam Moore, we’re working every week but we are working still at about 75, 70% to 75% of capacity and we’re just handling it with a reduced schedule every week rather than taking a week down a month. Todd Schwartzman - Sidoti & Company: And what month did the reductions begin?

From Bradington-Young -- actually, for both of them, probably around April. Todd Schwartzman - Sidoti & Company: Okay. Now, I know that some others in the industry have taken domestic cut-and-sew operations to Mexico, or plan to do so in the not-too-distant future. Is this something that Hooker would look into?

You know, at Bradington-Young, Todd, we’ve had cut-and-sewn covers as part of our program going back to when we acquired them five years ago. I think those cut-and-sewn covers are actually coming out of Asia versus Mexico and that percentage of our business really hasn’t changed over the five years. We don’t have any intention of going to Mexico with cut-and-sewn that I’m aware of in either Bradington-Young or Sam Moore, and I don’t think Sam Moore does any cut-and-sew covers. Theirs is much more custom, it’s not the same as -- I think you’re maybe referring to Lazy Boy’s announcement to move some of their cut-and-sew there, but I think they are dealing in much higher volume of fewer covers, where ours is much more special order and it’s not practical. Todd Schwartzman - Sidoti & Company: So given the volume, given the nature of the product, you’re not -- it doesn’t seem like you are overly concerned about the prospects for inflation in Chinese and other Asian labor costs in the foreseeable future?

Well, we’re concerned about what’s going on with the cost of product coming out of Asia and also hides out of Europe, and anything that’s steel-based, even if we’re buying from U.S. companies. Our refiner mechanisms say for Bradington-Young, they are oftentimes importing that and whether they are importing it or not, steel has gone up. So we are very concerned about the cost increases coming on raw materials as well as on finished product. But we think that price increases we’ve already implemented earlier this year and increases that we’ll probably need to implement later in the year will offset the cost increases we’ve had. Todd Schwartzman - Sidoti & Company: And lastly, in the downturn, I don’t think anyone really in their right mind expects that anything can be done to stimulate demand meaningfully industry wide. And I was just wondering, with respect to working with your retailers to do just that, selling furniture traditionally is a pretty passive business. I’m sure you’ll agree most retailers essentially wait around for traffic to pick up. What could you guys do specifically or maybe if you want to speak to the industry, what could you do other wholesalers do coming out of this downturn to get consumers excited about buying furniture, especially given the housing boom, the last one. It’s been over for about two years now and I suspect that we won’t see one of that magnitude for quite some time to come.

Well, as we travel around and talk to investors, that’s an argument that we hear a lot as demand is terrible and there is nothing you can do about it, so why even try? And we really don’t buy into that argument. I mean, demand is terrible but I think to just say there is absolutely nothing we can do with our customers to impact business is like throwing in the towel. And so we are working with our retailers and we have some national sales periods where we try to drive traffic into their stores through our website and have bought keywords in home office or home entertainment or youth bedroom or whatever, but really more than that we’re trying through our sales reps to go to the customer and say we want to work with you, you tell us what you think will drive some traffic into your stores and we’re as customized as one customer at a time. And we’ve done things from helping them run sales to helping them with their advertising or working on the price of key pieces of bed in a bedroom group, or different type of -- you know, discount the price of, or maybe a free chair with a dining group, or discount a bed as I say with a bedroom group, or a desk chair with a home office group. We’ve worked with people to do events, you know, estate sale type events where they will do live remotes from their locations and -- so I think there’s a lot of things that we are trying. Some of them work better than others but I think the fact that we are there with our customers and I think they appreciate that we are concerned about the problems they are having, and even if it doesn’t yield tremendous results, I think you can create some good will from at least attempting. And as far as when business improves coming out of it, I think we would continue to do a lot of the same types of events or efforts in advertising and promoting as we have. I don’t know if that answers your question but that’s kind of what we are trying to do in the present environment. Todd Schwartzman - Sidoti & Company: I was trying to think more big picture, out-of-the-box, if you will. I think some of the promotions that you described, Paul, have been status quo, off and on in the industry for a century or longer. Are there any other industries, consumer goods or otherwise, from which you would draw, or could draw inspiration and basically changing the way the industry courts the consumer, or the way Hooker Furniture courts the consumer?

Look at what other industries do but I think in our industry, you have a very fragmented industry. There’s not players that have the skill of automobile companies or consumer electronic companies to really drive things. And in our distribution, it’s not dedicated distribution so I think that some of the things you see from car companies or electronic companies are maybe not practical for a company our size that doesn’t have dedicated distribution. Todd Schwartzman - Sidoti & Company: Got it. Thanks, Paul. Thanks, Larry. That’s it.

Thank you. Ladies and gentlemen, that will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Ryder for any additional or closing remarks.

Well, the only thing that I would point out, and I’ll let Paul add to this as well, the only thing that I would point out is it’s obvious that at $71 million a quarter, we were not able to post the kind of profitability that we feel like we can and will again post when business improves. But as you all know, in an environment like this, while we are doing everything to spur demand that we can, it’s also an opportunity to take a look at cost cutting and we are in the process right now of having all of our managers look for any non-essential spending that we’ve got and it crosses all lines of our business. And we are looking at everything from manpower needs to advertising, professional services, marketing expenses, and all of our operations across not only Hooker Furniture but also our subsidiary upholstery companies. We are careful, however, to make sure that we don’t do anything to disrupt or slow the delivery of products or the services to our dealers. That’s critically important in an environment like this, that we maintain high standards there. And we are careful that we are not going to take cuts that affect our infrastructure and our ability to rebound when the economy does present a better outlook for us. So we are in that process right now of cost-cutting and we’ll do everything in our power to reduce expenses in this environment that we are in. It will not only serve us well in the current environment but it will continue to serve us after the rebound does occur, when that occurs. I think that’s all our comments. We really appreciate everybody on the call today and listening in. I will say that our 10-Q for the quarter has been filed as of last night and is available on the SEC websites, and as always, thank you very much for attending.

Thank you. Ladies and gentlemen, that will conclude today’s conference. We do thank you for your participation and you may disconnect at this time.