HNI Corporation and Subsidiaries
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Quarterly Report on Form 10-Q
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Index
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PART I. FINANCIAL INFORMATION
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Page
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Item 1. Financial Statements (Unaudited)
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Condensed Consolidated Balance Sheets - September 30, 2017 and December 31, 2016
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Condensed Consolidated Statements of Comprehensive Income - Three Months and Nine Months Ended September 30, 2017 and October 1, 2016
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Consolidated Statements of Equity - September 30, 2017 and October 1, 2016
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Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2017 and October 1, 2016
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Notes to Condensed Consolidated Financial Statements
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
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Item 4. Controls and Procedures
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PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
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Item 1A. Risk Factors
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3. Defaults Upon Senior Securities - None
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-
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Item 4. Mine Safety Disclosures - Not Applicable
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-
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Item 5. Other Information - None
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-
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Item 6. Exhibits
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SIGNATURES
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EXHIBIT INDEX
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HNI Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (In thousands) |
|||||||
(Unaudited)
|
|||||||
|
September 30,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
||||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
22,416
|
|
|
$
|
36,312
|
|
Short-term investments
|
1,692
|
|
|
2,252
|
|
||
Receivables
|
266,087
|
|
|
229,436
|
|
||
Inventories
|
154,085
|
|
|
118,438
|
|
||
Prepaid expenses and other current assets
|
43,863
|
|
|
46,603
|
|
||
Total Current Assets
|
488,143
|
|
|
433,041
|
|
||
|
|
|
|
||||
Property, Plant, and Equipment:
|
|
|
|
|
|||
Land and land improvements
|
29,581
|
|
|
27,403
|
|
||
Buildings
|
319,568
|
|
|
283,930
|
|
||
Machinery and equipment
|
546,128
|
|
|
528,099
|
|
||
Construction in progress
|
46,488
|
|
|
51,343
|
|
||
|
941,765
|
|
|
890,775
|
|
||
Less accumulated depreciation
|
548,791
|
|
|
534,330
|
|
||
Net Property, Plant, and Equipment
|
392,974
|
|
|
356,445
|
|
||
|
|
|
|
||||
Goodwill and Other Intangible Assets
|
513,976
|
|
|
511,419
|
|
||
|
|
|
|
||||
Deferred Income Taxes
|
210
|
|
|
719
|
|
||
|
|
|
|
||||
Other Assets
|
30,113
|
|
|
28,610
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
1,425,416
|
|
|
$
|
1,330,234
|
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HNI Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (In thousands, except par value) |
|||||||
(Unaudited)
|
|||||||
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September 30,
2017 |
|
December 31,
2016 |
||||
Liabilities and Equity
|
|
||||||
Current Liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
430,617
|
|
|
$
|
425,046
|
|
Current maturities of long-term debt
|
17,270
|
|
|
34,017
|
|
||
Current maturities of other long-term obligations
|
3,018
|
|
|
4,410
|
|
||
Total Current Liabilities
|
450,905
|
|
|
463,473
|
|
||
|
|
|
|
||||
Long-Term Debt
|
295,000
|
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|
180,000
|
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||
|
|
|
|
||||
Other Long-Term Liabilities
|
65,236
|
|
|
75,044
|
|
||
|
|
|
|
||||
Deferred Income Taxes
|
118,394
|
|
|
110,708
|
|
||
|
|
|
|
||||
Equity:
|
|
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|
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||
HNI Corporation shareholders' equity:
|
|
|
|
|
|
||
Capital Stock:
|
|
|
|
|
|
||
Preferred stock - $1 par value, authorized 2,000 shares, no shares outstanding
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Common stock - $1 par value, authorized 200,000 shares, outstanding:
|
|
|
|
||||
September 30, 2017 – 43,427 shares;
|
|
|
|
||||
December 31, 2016 – 44,079 shares
|
43,427
|
|
|
44,079
|
|
||
|
|
|
|
||||
Additional paid-in capital
|
6,214
|
|
|
—
|
|
||
Retained earnings
|
450,089
|
|
|
461,524
|
|
||
Accumulated other comprehensive income (loss)
|
(4,267
|
)
|
|
(5,000
|
)
|
||
Total HNI Corporation shareholders' equity
|
495,463
|
|
|
500,603
|
|
||
|
|
|
|
||||
Non-controlling interest
|
418
|
|
|
406
|
|
||
|
|
|
|
||||
Total Equity
|
495,881
|
|
|
501,009
|
|
||
|
|
|
|
||||
Total Liabilities and Equity
|
$
|
1,425,416
|
|
|
$
|
1,330,234
|
|
HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(In thousands, except share and per share data)
|
|||||||||||||||
(Unaudited)
|
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
|
|
||||||||||||
Net sales
|
$
|
599,455
|
|
|
$
|
584,629
|
|
|
$
|
1,591,607
|
|
|
$
|
1,622,204
|
|
Cost of sales
|
378,211
|
|
|
363,075
|
|
|
1,011,888
|
|
|
1,006,019
|
|
||||
Gross profit
|
221,244
|
|
|
221,554
|
|
|
579,719
|
|
|
616,185
|
|
||||
Selling and administrative expenses
|
169,547
|
|
|
169,495
|
|
|
495,897
|
|
|
496,920
|
|
||||
Gain on sale and license of assets
|
(6,805
|
)
|
|
—
|
|
|
(6,805
|
)
|
|
—
|
|
||||
Restructuring charges
|
783
|
|
|
399
|
|
|
3,325
|
|
|
2,057
|
|
||||
Operating income
|
57,719
|
|
|
51,660
|
|
|
87,302
|
|
|
117,208
|
|
||||
Interest income
|
71
|
|
|
80
|
|
|
467
|
|
|
221
|
|
||||
Interest expense
|
1,835
|
|
|
1,091
|
|
|
4,228
|
|
|
4,096
|
|
||||
Income before income taxes
|
55,955
|
|
|
50,649
|
|
|
83,541
|
|
|
113,333
|
|
||||
Income taxes
|
18,624
|
|
|
16,837
|
|
|
27,573
|
|
|
38,652
|
|
||||
Net income
|
37,331
|
|
|
33,812
|
|
|
55,968
|
|
|
74,681
|
|
||||
Less: Net income (loss) attributable to non-controlling interest
|
60
|
|
|
(1
|
)
|
|
12
|
|
|
(4
|
)
|
||||
Net income attributable to HNI Corporation
|
$
|
37,271
|
|
|
$
|
33,813
|
|
|
$
|
55,956
|
|
|
$
|
74,685
|
|
|
|
|
|
|
|
|
|
||||||||
Average number of common shares outstanding – basic
|
43,682,805
|
|
|
44,547,375
|
|
|
43,970,377
|
|
|
44,412,310
|
|
||||
Net income attributable to HNI Corporation per common share – basic
|
$
|
0.85
|
|
|
$
|
0.76
|
|
|
$
|
1.27
|
|
|
$
|
1.68
|
|
Average number of common shares outstanding – diluted
|
44,479,117
|
|
|
45,844,566
|
|
|
45,078,719
|
|
|
45,488,067
|
|
||||
Net income attributable to HNI Corporation per common share – diluted
|
$
|
0.84
|
|
|
$
|
0.74
|
|
|
$
|
1.24
|
|
|
$
|
1.64
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
$
|
320
|
|
|
$
|
(80
|
)
|
|
$
|
779
|
|
|
$
|
(678
|
)
|
Change in unrealized gains (losses) on marketable securities (net of tax)
|
7
|
|
|
(62
|
)
|
|
44
|
|
|
11
|
|
||||
Change in derivative financial instruments (net of tax)
|
38
|
|
|
422
|
|
|
(90
|
)
|
|
(1,131
|
)
|
||||
Other comprehensive income (loss) (net of tax)
|
365
|
|
|
280
|
|
|
733
|
|
|
(1,798
|
)
|
||||
Comprehensive income
|
37,696
|
|
|
34,092
|
|
|
56,701
|
|
|
72,883
|
|
||||
Less: Comprehensive income (loss) attributable to
non-controlling interest
|
60
|
|
|
(1
|
)
|
|
12
|
|
|
(4
|
)
|
||||
Comprehensive income attributable to
HNI Corporation
|
$
|
37,636
|
|
|
$
|
34,093
|
|
|
$
|
56,689
|
|
|
$
|
72,887
|
|
HNI Corporation and Subsidiaries
Consolidated Statements of Equity
(In thousands, except per share data)
(Unaudited)
|
|||||||||||||||||||||||
|
Common
Stock
|
|
|
Additional
Paid-in
Capital
|
|
|
Retained
Earnings
|
|
|
Accumulated Other
Comprehensive
(Loss)/Income
|
|
|
Non-
controlling
Interest
|
|
|
Total
Shareholders’
Equity
|
|
||||||
Balance, December 31, 2016
|
$
|
44,079
|
|
|
$
|
—
|
|
|
$
|
461,524
|
|
|
$
|
(5,000
|
)
|
|
$
|
406
|
|
|
$
|
501,009
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
55,956
|
|
|
—
|
|
|
12
|
|
|
55,968
|
|
||||||
Other comprehensive income
(net of tax)
|
—
|
|
|
—
|
|
|
—
|
|
|
733
|
|
|
—
|
|
|
733
|
|
||||||
Cash dividends; $0.845 per share
|
—
|
|
|
—
|
|
|
(37,175
|
)
|
|
—
|
|
|
—
|
|
|
(37,175
|
)
|
||||||
Common shares – treasury:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Shares purchased
|
(1,301
|
)
|
|
(21,333
|
)
|
|
(30,216
|
)
|
|
—
|
|
|
—
|
|
|
(52,850
|
)
|
||||||
Shares issued under Members’ Stock Purchase Plan and stock awards (net of tax)
|
649
|
|
|
27,547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,196
|
|
||||||
Balance, September 30, 2017
|
$
|
43,427
|
|
|
$
|
6,214
|
|
|
$
|
450,089
|
|
|
$
|
(4,267
|
)
|
|
$
|
418
|
|
|
$
|
495,881
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
Capital
|
|
|
Retained
Earnings
|
|
|
Accumulated Other
Comprehensive
(Loss)/Income
|
|
|
Non-
controlling
Interest
|
|
|
Total
Shareholders’
Equity
|
|
||||||
Balance, January 2, 2016
|
$
|
44,158
|
|
|
$
|
4,407
|
|
|
$
|
433,575
|
|
|
$
|
(5,186
|
)
|
|
$
|
345
|
|
|
$
|
477,299
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
74,685
|
|
|
—
|
|
|
(4
|
)
|
|
74,681
|
|
||||||
Other comprehensive (loss)
(net of tax)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,798
|
)
|
|
—
|
|
|
(1,798
|
)
|
||||||
Cash dividends; $0.815 per share
|
—
|
|
|
—
|
|
|
(36,260
|
)
|
|
—
|
|
|
—
|
|
|
(36,260
|
)
|
||||||
Common shares – treasury:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Shares purchased
|
(608
|
)
|
|
(29,798
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,406
|
)
|
||||||
Shares issued under Members’ Stock Purchase Plan and stock awards (net of tax)
|
987
|
|
|
39,838
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,825
|
|
||||||
Balance, October 1, 2016
|
$
|
44,537
|
|
|
$
|
14,447
|
|
|
$
|
472,000
|
|
|
$
|
(6,984
|
)
|
|
$
|
341
|
|
|
$
|
524,341
|
|
HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
|
|||||||
(Unaudited)
|
|||||||
|
|
||||||
|
Nine Months Ended
|
||||||
|
September 30,
2017 |
|
October 1,
2016 |
||||
Net Cash Flows From (To) Operating Activities:
|
|
|
|
||||
Net income
|
$
|
55,968
|
|
|
$
|
74,681
|
|
Non-cash items included in net income:
|
|
|
|
||||
Depreciation and amortization
|
54,524
|
|
|
48,908
|
|
||
Other post-retirement and post-employment benefits
|
1,194
|
|
|
1,232
|
|
||
Stock-based compensation
|
6,759
|
|
|
7,400
|
|
||
Excess tax benefits from stock compensation
|
—
|
|
|
(1,797
|
)
|
||
Deferred income taxes
|
8,128
|
|
|
14,371
|
|
||
(Gain) loss on sale, retirement, and license of long-lived assets and intangibles, net
|
(5,085
|
)
|
|
841
|
|
||
Other – net
|
(1,649
|
)
|
|
980
|
|
||
Net increase (decrease) in operating assets and liabilities
|
(53,096
|
)
|
|
(26,582
|
)
|
||
Increase (decrease) in other liabilities
|
(9,399
|
)
|
|
(6,327
|
)
|
||
Net cash flows from (to) operating activities
|
57,344
|
|
|
113,707
|
|
||
|
|
|
|
||||
Net Cash Flows From (To) Investing Activities:
|
|
|
|
|
|
||
Capital expenditures
|
(87,142
|
)
|
|
(62,796
|
)
|
||
Proceeds from sale and license of property, plant, equipment, and intangibles
|
8,646
|
|
|
987
|
|
||
Capitalized software
|
(16,749
|
)
|
|
(19,703
|
)
|
||
Acquisition spending, net of cash acquired
|
(898
|
)
|
|
(33,567
|
)
|
||
Purchase of investments
|
(2,874
|
)
|
|
(8,724
|
)
|
||
Sales or maturities of investments
|
2,678
|
|
|
8,581
|
|
||
Other – net
|
1,511
|
|
|
500
|
|
||
Net cash flows from (to) investing activities
|
(94,828
|
)
|
|
(114,722
|
)
|
||
|
|
|
|
||||
Net Cash Flows From (To) Financing Activities:
|
|
|
|
|
|
||
Payments of note and long-term debt and other financing
|
(185,390
|
)
|
|
(499,486
|
)
|
||
Proceeds from long-term debt
|
287,188
|
|
|
543,286
|
|
||
Dividends paid
|
(37,175
|
)
|
|
(36,260
|
)
|
||
Purchase of HNI Corporation common stock
|
(52,850
|
)
|
|
(30,406
|
)
|
||
Proceeds from sales of HNI Corporation common stock
|
12,024
|
|
|
20,871
|
|
||
Withholding related to net share settlements of equity based awards
|
(209
|
)
|
|
—
|
|
||
Excess tax benefits from stock compensation
|
—
|
|
|
1,797
|
|
||
Net cash flows from (to) financing activities
|
23,588
|
|
|
(198
|
)
|
||
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
(13,896
|
)
|
|
(1,213
|
)
|
||
Cash and cash equivalents at beginning of period
|
36,312
|
|
|
28,548
|
|
||
Cash and cash equivalents at end of period
|
$
|
22,416
|
|
|
$
|
27,335
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Stock-based compensation expense
|
$
|
956
|
|
|
$
|
959
|
|
|
$
|
6,759
|
|
|
$
|
7,400
|
|
|
Nine Months Ended
|
||||||
|
September 30,
2017 |
|
October 1,
2016 |
||||
Stock options
|
$
|
7,206
|
|
|
$
|
7,720
|
|
Time-based restricted stock units
|
$
|
—
|
|
|
$
|
712
|
|
|
Unrecognized Compensation Expense
(in thousands)
|
|
Weighted-Average Remaining
Service Period
(years)
|
||
Non-vested stock options
|
$
|
4,103
|
|
|
1.2
|
Non-vested restricted stock units
|
$
|
474
|
|
|
0.8
|
(In thousands)
|
September 30,
2017 |
|
December 31, 2016
|
||||
|
|||||||
Finished products
|
$
|
96,275
|
|
|
$
|
71,223
|
|
Materials and work in process
|
81,970
|
|
|
71,375
|
|
||
LIFO allowance
|
(24,160
|
)
|
|
(24,160
|
)
|
||
|
$
|
154,085
|
|
|
$
|
118,438
|
|
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized Gains (Losses) on Marketable Securities
|
|
Pension and
Post-retirement Liabilities
|
|
Derivative Financial Instruments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
Balance as of December 31, 2016
|
|
$
|
(1,188
|
)
|
|
$
|
(105
|
)
|
|
$
|
(5,167
|
)
|
|
$
|
1,460
|
|
|
$
|
(5,000
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
779
|
|
|
68
|
|
|
—
|
|
|
(471
|
)
|
|
376
|
|
|||||
Tax (expense) or benefit
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
174
|
|
|
150
|
|
|||||
Amounts reclassified from accumulated other comprehensive (income) loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|
207
|
|
|||||
Balance as of September 30, 2017
|
|
$
|
(409
|
)
|
|
$
|
(61
|
)
|
|
$
|
(5,167
|
)
|
|
$
|
1,370
|
|
|
$
|
(4,267
|
)
|
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized Gains (Losses) on Marketable Securities
|
|
Pension and
Post-retirement Liabilities
|
|
Derivative Financial Instruments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
Balance as of January 2, 2016
|
|
$
|
322
|
|
|
$
|
(2
|
)
|
|
$
|
(5,506
|
)
|
|
$
|
—
|
|
|
$
|
(5,186
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(678
|
)
|
|
17
|
|
|
—
|
|
|
(2,506
|
)
|
|
(3,167
|
)
|
|||||
Tax (expense) or benefit
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
922
|
|
|
916
|
|
|||||
Amounts reclassified from accumulated other comprehensive (income) loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
453
|
|
|
453
|
|
|||||
Balance as of October 1, 2016
|
|
$
|
(356
|
)
|
|
$
|
9
|
|
|
$
|
(5,506
|
)
|
|
$
|
(1,131
|
)
|
|
$
|
(6,984
|
)
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Details about Accumulated Other Comprehensive Income (Loss) Components
|
|
Affected Line Item in the Statement Where Net Income is Presented
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
|
Interest (expense) or income
|
|
$
|
(27
|
)
|
|
$
|
(302
|
)
|
|
$
|
(328
|
)
|
|
$
|
(717
|
)
|
|
|
Tax (expense) or benefit
|
|
10
|
|
|
111
|
|
|
121
|
|
|
264
|
|
||||
|
|
Net of tax
|
|
$
|
(17
|
)
|
|
$
|
(191
|
)
|
|
$
|
(207
|
)
|
|
$
|
(453
|
)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Numerator for both basic and diluted EPS attributable to HNI Corporation net income
|
|
$
|
37,271
|
|
|
$
|
33,813
|
|
|
$
|
55,956
|
|
|
$
|
74,685
|
|
Denominators:
|
|
|
|
|
|
|
|
|
|
|
||||||
Denominator for basic EPS weighted-average common shares outstanding
|
|
43,683
|
|
|
44,547
|
|
|
43,970
|
|
|
44,412
|
|
||||
Potentially dilutive shares from stock-based compensation plans
|
|
796
|
|
|
1,298
|
|
|
1,109
|
|
|
1,076
|
|
||||
Denominator for diluted EPS
|
|
44,479
|
|
|
45,845
|
|
|
45,079
|
|
|
45,488
|
|
||||
Earnings per share – basic
|
|
$
|
0.85
|
|
|
$
|
0.76
|
|
|
$
|
1.27
|
|
|
$
|
1.68
|
|
Earnings per share – diluted
|
|
$
|
0.84
|
|
|
$
|
0.74
|
|
|
$
|
1.24
|
|
|
$
|
1.64
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||
Common stock equivalents excluded because their inclusion would be anti-dilutive
|
1,111,336
|
|
|
352,380
|
|
|
788,193
|
|
|
437,684
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Cost of sales - accelerated depreciation
|
$
|
1,552
|
|
|
$
|
731
|
|
|
$
|
8,711
|
|
|
$
|
2,154
|
|
Restructuring charges
|
783
|
|
|
399
|
|
|
3,325
|
|
|
2,057
|
|
||||
|
$
|
2,335
|
|
|
$
|
1,130
|
|
|
$
|
12,036
|
|
|
$
|
4,211
|
|
|
|
Severance
|
|
Facility Exit Costs & Other
|
|
Total
|
||||||
Balance as of December 31, 2016
|
|
$
|
2,704
|
|
|
$
|
—
|
|
|
$
|
2,704
|
|
Restructuring charges, excluding accelerated depreciation
|
|
841
|
|
|
2,484
|
|
|
3,325
|
|
|||
Cash payments
|
|
(2,711
|
)
|
|
(1,349
|
)
|
|
(4,060
|
)
|
|||
Balance as of September 30, 2017
|
|
$
|
834
|
|
|
$
|
1,135
|
|
|
$
|
1,969
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Goodwill
|
$
|
290,657
|
|
|
$
|
290,699
|
|
Definite-lived intangible assets
|
185,814
|
|
|
182,666
|
|
||
Indefinite-lived intangible assets
|
37,505
|
|
|
38,054
|
|
||
|
$
|
513,976
|
|
|
$
|
511,419
|
|
|
|
Office
Furniture
|
|
Hearth
Products
|
|
Total
|
||||||
Balance as of December 31, 2016
|
|
|
|
|
|
|
||||||
Goodwill
|
|
$
|
165,643
|
|
|
$
|
183,199
|
|
|
$
|
348,842
|
|
Accumulated impairment losses
|
|
(58,000
|
)
|
|
(143
|
)
|
|
(58,143
|
)
|
|||
Net goodwill balance as of December 31, 2016
|
|
107,643
|
|
|
183,056
|
|
|
290,699
|
|
|||
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
(42
|
)
|
|
—
|
|
|
(42
|
)
|
|||
|
|
|
|
|
|
|
||||||
Balance as of September 30, 2017
|
|
|
|
|
|
|
|
|
||||
Goodwill
|
|
165,601
|
|
|
183,199
|
|
|
348,800
|
|
|||
Accumulated impairment losses
|
|
(58,000
|
)
|
|
(143
|
)
|
|
(58,143
|
)
|
|||
Net goodwill balance as of September 30, 2017
|
|
$
|
107,601
|
|
|
$
|
183,056
|
|
|
$
|
290,657
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Patents
|
|
$
|
40
|
|
|
$
|
24
|
|
|
$
|
16
|
|
|
$
|
18,645
|
|
|
$
|
18,623
|
|
|
$
|
22
|
|
Software
|
|
163,741
|
|
|
31,022
|
|
|
132,719
|
|
|
149,587
|
|
|
25,792
|
|
|
123,795
|
|
||||||
Trademarks and trade names
|
|
7,564
|
|
|
1,896
|
|
|
5,668
|
|
|
7,564
|
|
|
1,401
|
|
|
6,163
|
|
||||||
Customer lists and other
|
|
111,503
|
|
|
64,092
|
|
|
47,411
|
|
|
117,789
|
|
|
65,103
|
|
|
52,686
|
|
||||||
Net definite lived intangible assets
|
|
$
|
282,848
|
|
|
$
|
97,034
|
|
|
$
|
185,814
|
|
|
$
|
293,585
|
|
|
$
|
110,919
|
|
|
$
|
182,666
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Amortization expense
|
$
|
4,404
|
|
|
$
|
3,235
|
|
|
$
|
10,492
|
|
|
$
|
8,575
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
||||||||||
Amortization expense
|
|
$
|
16.4
|
|
|
$
|
23.2
|
|
|
$
|
22.1
|
|
|
$
|
21.2
|
|
|
$
|
20.5
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Trademarks and trade names
|
$
|
37,505
|
|
|
$
|
38,054
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
||||
Balance at beginning of period
|
|
$
|
15,250
|
|
|
$
|
16,227
|
|
Accruals for warranties issued during period
|
|
15,197
|
|
|
14,762
|
|
||
Adjustments related to pre-existing warranties
|
|
(298
|
)
|
|
359
|
|
||
Settlements made during the period
|
|
(15,424
|
)
|
|
(15,379
|
)
|
||
Balance at end of period
|
|
$
|
14,725
|
|
|
$
|
15,969
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Current - in the next twelve months
|
$
|
8,958
|
|
|
$
|
6,975
|
|
Long-term - beyond one year
|
5,767
|
|
|
8,275
|
|
||
|
$
|
14,725
|
|
|
$
|
15,250
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Service cost
|
|
$
|
185
|
|
|
$
|
184
|
|
|
$
|
556
|
|
|
$
|
552
|
|
Interest cost
|
|
206
|
|
|
212
|
|
|
619
|
|
|
634
|
|
||||
Amortization of (gain)/loss
|
|
6
|
|
|
16
|
|
|
19
|
|
|
46
|
|
||||
Net periodic benefit cost
|
|
$
|
397
|
|
|
$
|
412
|
|
|
$
|
1,194
|
|
|
$
|
1,232
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Income before income taxes
|
$
|
55,955
|
|
|
$
|
50,649
|
|
|
$
|
83,541
|
|
|
$
|
113,333
|
|
Income taxes
|
$
|
18,624
|
|
|
$
|
16,837
|
|
|
$
|
27,573
|
|
|
$
|
38,652
|
|
Effective tax rate
|
33.3
|
%
|
|
33.2
|
%
|
|
33.0
|
%
|
|
34.1
|
%
|
|
|
Fair value as of measurement date
|
|
Quoted prices in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Balance as of September 30, 2017
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents (including money market funds) (1)
|
|
$
|
22,416
|
|
|
$
|
22,416
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government securities (2)
|
|
$
|
6,101
|
|
|
$
|
—
|
|
|
$
|
6,101
|
|
|
$
|
—
|
|
Corporate bonds (2)
|
|
$
|
6,419
|
|
|
$
|
—
|
|
|
$
|
6,419
|
|
|
$
|
—
|
|
Derivative financial instruments (3)
|
|
$
|
2,166
|
|
|
$
|
—
|
|
|
$
|
2,166
|
|
|
$
|
—
|
|
Variable-rate debt obligations (4)
|
|
$
|
306,800
|
|
|
$
|
—
|
|
|
$
|
306,800
|
|
|
$
|
—
|
|
Deferred stock-based compensation (5)
|
|
$
|
9,476
|
|
|
$
|
—
|
|
|
$
|
9,476
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance as of December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents (including money market funds) (1)
|
|
$
|
36,312
|
|
|
$
|
36,312
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government securities (2)
|
|
$
|
6,268
|
|
|
$
|
—
|
|
|
$
|
6,268
|
|
|
$
|
—
|
|
Corporate bonds (2)
|
|
$
|
6,017
|
|
|
$
|
—
|
|
|
$
|
6,017
|
|
|
$
|
—
|
|
Derivative financial instruments (3)
|
|
$
|
2,309
|
|
|
$
|
—
|
|
|
$
|
2,309
|
|
|
$
|
—
|
|
Variable-rate debt obligations (4)
|
|
$
|
214,000
|
|
|
$
|
—
|
|
|
$
|
214,000
|
|
|
$
|
—
|
|
Deferred stock-based compensation (5)
|
|
$
|
12,203
|
|
|
$
|
—
|
|
|
$
|
12,203
|
|
|
$
|
—
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Note payable to bank, revolving credit facility with interest at a variable rate
(September 30, 2017 - 2.5%; December 31, 2016 - 1.8%)
|
$
|
306,800
|
|
|
$
|
214,000
|
|
Other notes and amounts
|
5,470
|
|
|
17
|
|
||
Total debt
|
312,270
|
|
|
214,017
|
|
||
Less: Current maturities of long-term debt
|
17,270
|
|
|
34,017
|
|
||
Long-term debt
|
$
|
295,000
|
|
|
$
|
180,000
|
|
•
|
a consolidated interest coverage ratio (as defined in the credit agreement) of not less than
4.0
to 1.0, based upon the ratio of (a) consolidated EBITDA for the last four fiscal quarters to (b) the sum of consolidated interest charges; and
|
•
|
a consolidated leverage ratio (as defined in the credit agreement) of not greater than
3.5
to 1.0, based upon the ratio of (a) the quarter-end consolidated funded indebtedness to (b) consolidated EBITDA for the last four fiscal quarters.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Net Sales:
|
|
|
|
|
|
|
|
||||||||
Office furniture
|
$
|
465,312
|
|
|
$
|
454,946
|
|
|
$
|
1,231,737
|
|
|
$
|
1,270,398
|
|
Hearth products
|
134,143
|
|
|
129,683
|
|
|
359,870
|
|
|
351,806
|
|
||||
Total
|
$
|
599,455
|
|
|
$
|
584,629
|
|
|
$
|
1,591,607
|
|
|
$
|
1,622,204
|
|
|
|
|
|
|
|
|
|
||||||||
Income Before Income Taxes:
|
|
|
|
|
|
|
|
||||||||
Office furniture
|
$
|
39,729
|
|
|
$
|
44,729
|
|
|
$
|
65,856
|
|
|
$
|
109,396
|
|
Hearth products
|
28,737
|
|
|
19,108
|
|
|
52,651
|
|
|
41,623
|
|
||||
General corporate
|
(12,511
|
)
|
|
(13,188
|
)
|
|
(34,966
|
)
|
|
(37,686
|
)
|
||||
Total
|
$
|
55,955
|
|
|
$
|
50,649
|
|
|
$
|
83,541
|
|
|
$
|
113,333
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and Amortization Expense:
|
|
|
|
|
|
|
|
||||||||
Office furniture
|
$
|
12,132
|
|
|
$
|
10,889
|
|
|
$
|
37,515
|
|
|
$
|
32,709
|
|
Hearth products
|
1,973
|
|
|
3,034
|
|
|
8,167
|
|
|
9,012
|
|
||||
General corporate
|
3,955
|
|
|
3,354
|
|
|
8,842
|
|
|
7,187
|
|
||||
Total
|
$
|
18,060
|
|
|
$
|
17,277
|
|
|
$
|
54,524
|
|
|
$
|
48,908
|
|
|
|
|
|
|
|
|
|
||||||||
Capital Expenditures (including capitalized software):
|
|
|
|
|
|
|
|
||||||||
Office furniture
|
$
|
27,102
|
|
|
$
|
13,875
|
|
|
$
|
64,467
|
|
|
$
|
43,923
|
|
Hearth products
|
5,606
|
|
|
1,957
|
|
|
12,818
|
|
|
8,969
|
|
||||
General corporate
|
7,095
|
|
|
10,811
|
|
|
26,606
|
|
|
29,607
|
|
||||
Total
|
$
|
39,803
|
|
|
$
|
26,643
|
|
|
$
|
103,891
|
|
|
$
|
82,499
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
As of
September 30, 2017 |
|
As of
December 31, 2016 |
||||||||
Identifiable Assets:
|
|
|
|
|
|
|
|
||||||||
Office furniture
|
|
|
|
|
$
|
838,094
|
|
|
$
|
749,145
|
|
||||
Hearth products
|
|
|
|
|
361,241
|
|
|
340,494
|
|
||||||
General corporate
|
|
|
|
|
226,081
|
|
|
240,595
|
|
||||||
Total
|
|
|
|
|
$
|
1,425,416
|
|
|
$
|
1,330,234
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
Percent
Change
|
|
September 30,
2017 |
|
October 1,
2016 |
|
Percent
Change
|
||||||||||
Net sales
|
$
|
599,455
|
|
|
$
|
584,629
|
|
|
2.5
|
%
|
|
$
|
1,591,607
|
|
|
$
|
1,622,204
|
|
|
(1.9
|
)%
|
Cost of sales
|
378,211
|
|
|
363,075
|
|
|
4.2
|
%
|
|
1,011,888
|
|
|
1,006,019
|
|
|
0.6
|
%
|
||||
Gross profit
|
221,244
|
|
|
221,554
|
|
|
(0.1
|
)%
|
|
579,719
|
|
|
616,185
|
|
|
(5.9
|
)%
|
||||
Selling and administrative expenses
|
169,547
|
|
|
169,495
|
|
|
—
|
%
|
|
495,897
|
|
|
496,920
|
|
|
(0.2
|
)%
|
||||
Gain on sale and license of assets
|
(6,805
|
)
|
|
—
|
|
|
(100.0
|
)%
|
|
(6,805
|
)
|
|
—
|
|
|
(100.0
|
)%
|
||||
Restructuring charges
|
783
|
|
|
399
|
|
|
96.2
|
%
|
|
3,325
|
|
|
2,057
|
|
|
61.6
|
%
|
||||
Operating income
|
57,719
|
|
|
51,660
|
|
|
11.7
|
%
|
|
87,302
|
|
|
117,208
|
|
|
(25.5
|
)%
|
||||
Interest expense, net
|
1,764
|
|
|
1,011
|
|
|
74.5
|
%
|
|
3,761
|
|
|
3,875
|
|
|
(2.9
|
)%
|
||||
Income before income taxes
|
55,955
|
|
|
50,649
|
|
|
10.5
|
%
|
|
83,541
|
|
|
113,333
|
|
|
(26.3
|
)%
|
||||
Income taxes
|
18,624
|
|
|
16,837
|
|
|
10.6
|
%
|
|
27,573
|
|
|
38,652
|
|
|
(28.7
|
)%
|
||||
Net income
|
$
|
37,331
|
|
|
$
|
33,812
|
|
|
10.4
|
%
|
|
$
|
55,968
|
|
|
$
|
74,681
|
|
|
(25.1
|
)%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
Percent
Change
|
|
September 30,
2017 |
|
October 1,
2016 |
|
Percent
Change
|
||||||||||
Net sales
|
$
|
465,312
|
|
|
$
|
454,946
|
|
|
2.3
|
%
|
|
$
|
1,231,737
|
|
|
$
|
1,270,398
|
|
|
(3.0
|
)%
|
Cost of sales
|
302,305
|
|
|
287,597
|
|
|
5.1
|
%
|
|
809,430
|
|
|
804,238
|
|
|
0.6
|
%
|
||||
Gross profit
|
163,007
|
|
|
167,348
|
|
|
(2.6
|
)%
|
|
422,307
|
|
|
466,159
|
|
|
(9.4
|
)%
|
||||
Selling and administrative expenses
|
122,776
|
|
|
122,604
|
|
|
0.1
|
%
|
|
355,103
|
|
|
356,537
|
|
|
(0.4
|
)%
|
||||
Restructuring charges
|
502
|
|
|
15
|
|
|
3246.7
|
%
|
|
1,348
|
|
|
226
|
|
|
496.5
|
%
|
||||
Operating profit
|
$
|
39,729
|
|
|
$
|
44,729
|
|
|
(11.2
|
)%
|
|
$
|
65,856
|
|
|
$
|
109,396
|
|
|
(39.8
|
)%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
Percent
Change
|
|
September 30,
2017 |
|
October 1,
2016 |
|
Percent
Change
|
||||||||||
Net sales
|
$
|
134,143
|
|
|
$
|
129,683
|
|
|
3.4
|
%
|
|
$
|
359,870
|
|
|
$
|
351,806
|
|
|
2.3
|
%
|
Cost of sales
|
75,905
|
|
|
75,478
|
|
|
0.6
|
%
|
|
202,457
|
|
|
201,780
|
|
|
0.3
|
%
|
||||
Gross profit
|
58,238
|
|
|
54,205
|
|
|
7.4
|
%
|
|
157,413
|
|
|
150,026
|
|
|
4.9
|
%
|
||||
Selling and administrative expenses
|
36,025
|
|
|
34,713
|
|
|
3.8
|
%
|
|
109,591
|
|
|
106,572
|
|
|
2.8
|
%
|
||||
Gain on sale and license of assets
|
(6,805
|
)
|
|
—
|
|
|
(100.0
|
)%
|
|
(6,805
|
)
|
|
—
|
|
|
(100.0
|
)%
|
||||
Restructuring charges
|
281
|
|
|
384
|
|
|
(26.8
|
)%
|
|
1,976
|
|
|
1,831
|
|
|
7.9
|
%
|
||||
Operating profit
|
$
|
28,737
|
|
|
$
|
19,108
|
|
|
50.4
|
%
|
|
$
|
52,651
|
|
|
$
|
41,623
|
|
|
26.5
|
%
|
Period
|
|
Total Number of Shares (or Units) Purchased (1)
|
|
Average
Price Paid
per Share or
Unit
|
|
Total Number of
Shares (or Units)
Purchased as Part of Publicly Announced
Plans or Programs
|
|
Maximum
Number (or
Approximate
Dollar Value) of
Shares (or Units)
that May Yet be
Purchased Under
the Plans or
Programs
|
||||||
07/02/17 – 07/29/17
|
|
205,000
|
|
|
$
|
38.98
|
|
|
205,000
|
|
|
$
|
105,077,544
|
|
07/30/17 – 08/26/17
|
|
300,000
|
|
|
$
|
36.06
|
|
|
300,000
|
|
|
$
|
94,259,896
|
|
08/27/17 – 09/30/17
|
|
274,374
|
|
|
$
|
37.23
|
|
|
274,374
|
|
|
$
|
84,045,144
|
|
Total
|
|
779,374
|
|
|
|
|
779,374
|
|
|
|
|
•
|
Corporation's share purchase program ("Program") announced November 9, 2007, providing share repurchase authorization of $200,000,000 with no specific expiration date, with an increase announced November 7, 2014, providing additional share repurchase authorization of $200,000,000 with no specific expiration date.
|
•
|
No repurchase plans expired or were terminated during the
third
quarter of fiscal
2017
, nor do any plans exist under which the Corporation does not intend to make further purchases. The Program does not obligate the Corporation to purchase any shares and the authorization for the Program may be terminated, increased or decreased by the Board at any time.
|
|
HNI Corporation
|
|
|
|
|
|
|
Date: October 31, 2017
|
By:
|
/s/ Marshall H. Bridges
|
|
|
|
Marshall H. Bridges
|
|
|
|
Vice President and Chief Financial Officer
|
|
EXHIBIT INDEX
|
|
(10.1)
|
|
(10.2)
|
|
(10.3)
|
|
(31.1)
|
|
(31.2)
|
|
(32.1)
|
|
101
|
The following materials from HNI Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017 are formatted in XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Consolidated Statements of Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements
|
Date: October 31, 2017
|
By:
|
/s/ Stan A. Askren
|
|
|
Name: Stan A. Askren
|
|
|
Title: Chairman, President and Chief Executive Officer
|
Date: October 31, 2017
|
By:
|
/s/ Marshall H. Bridges
|
|
|
Name: Marshall H. Bridges
|
|
|
Title: Vice President and Chief Financial Officer
|
Date: October 31, 2017
|
By:
|
/s/ Stan A. Askren
|
|
|
Name: Stan A. Askren
|
|
|
Title: Chairman, President and Chief Executive Officer
|
Date: October 31, 2017
|
By:
|
/s/ Marshall H. Bridges
|
|
|
Name: Marshall H. Bridges
|
|
|
Title: Vice President and Chief Financial Officer
|