If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
|
||||
|
|
|||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
|
||||
Yes
|
☐
|
No
|
☒
|
|
HNI Corporation and Subsidiaries
|
||
Annual Report on Form 10-K
|
||
|
||
Table of Contents
|
||
|
|
|
PART I
|
||
|
|
Page
|
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
||
|
|
|
PART II
|
||
|
|
|
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
|
||
|
|
|
PART III
|
||
|
|
|
|
|
|
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
|
|
|
PART IV
|
||
|
|
|
Item 15.
|
||
Item 16.
|
||
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Research and development investments
|
$
|
34,699
|
|
|
$
|
33,420
|
|
|
$
|
31,846
|
|
•
|
Independent, local office products dealers that specialize in the sale of office furniture to business, government, education, and health care entities.
|
•
|
National office product distributors that sell furniture and office supplies through a national network of dealerships and sales offices. These distributors also sell through on-line and retail office products stores.
|
•
|
Wholesalers that serve as distributors of the Corporation's products to independent dealers and national office products distributors. These wholesalers maintain inventories of standard product lines for quick delivery to customers.
|
•
|
e-Commerce focused resellers that sell a wide array of business and consumer products to commercial and non-commercial customers. Orders are fulfilled both by the Corporation and/or directly by the e-Commerce reseller from inventory held in their facilities.
|
•
|
Direct sales of products to federal, state and local government offices or in certain circumstances a lead selling relationship with an end-user.
|
|
2019
|
|
|
2018
|
|
||
Net sales
|
$
|
2,246,947
|
|
|
$
|
2,257,895
|
|
Order backlog
|
$
|
166,502
|
|
|
$
|
181,522
|
|
Percent of net sales
|
7.4
|
%
|
|
8.0
|
%
|
•
|
diversion of management’s attention;
|
•
|
difficulties in assimilating the operations and products of an acquired business or in realizing projected efficiencies, cost savings and revenue synergies;
|
•
|
potential loss of key employees or customers of the acquired businesses or adverse effects on existing business relationships with suppliers and customers;
|
•
|
negative impact on member morale and performance as a result of job changes and reassignments;
|
•
|
reallocation of amounts of capital from other operating initiatives or an increase in leverage and debt service requirements to pay the acquisition purchase prices, which could in turn restrict the ability to access additional capital when needed or to pursue other important elements of the business strategy;
|
•
|
inaccurate assessment of undisclosed, contingent, or other liabilities or problems and unanticipated costs associated with the acquisition;
|
•
|
possible tax costs or inefficiencies associated with integrating the operations of a combined company; and
|
•
|
incorrect estimates made in accounting for acquisitions, incurrence of non-recurring charges, and write-off of significant amounts of goodwill that could adversely affect the financial results.
|
•
|
social and political turmoil, official corruption, and civil and labor unrest;
|
•
|
restrictive government actions, including the imposition of trade quotas and tariffs and restrictions on transfers of funds;
|
•
|
changes in labor laws and regulations affecting the ability to hire, retain, or dismiss employees;
|
•
|
the need to comply with multiple and potentially conflicting laws and regulations, including environmental and corporate laws and regulations;
|
•
|
the failure of the Corporation's compliance programs and internal training to prevent violations of the United States Foreign Corrupt Practices Act and similar anti-bribery laws;
|
•
|
preference for locally branded products and laws and business practices favoring local competition;
|
•
|
less effective protection of intellectual property and increased possibility of loss due to cyber-theft;
|
•
|
unfavorable business conditions or economic instability in any particular country or region;
|
•
|
infrastructure disruptions;
|
•
|
potentially conflicting cultural and business practices;
|
•
|
difficulty in obtaining distribution and support; and
|
•
|
changes to border taxes or other international tax reforms.
|
Location
|
|
Approximate Square Feet
|
|
Owned or Leased
|
|
Description of Use
|
Cedartown, Georgia
|
|
550,000
|
|
Owned
|
|
Manufacturing office furniture (1)
|
Dongguan, China
|
|
373,000
|
|
Leased
|
|
Manufacturing office furniture (1)
|
Garland, Texas
|
|
211,000
|
|
Leased
|
|
Warehousing office furniture
|
Hickory, North Carolina
|
|
206,000
|
|
Owned
|
|
Manufacturing office furniture (1)
|
Lake City, Minnesota
|
|
242,000
|
|
Owned
|
|
Manufacturing fireplaces
|
Mechanicsburg, Pennsylvania
|
|
400,000
|
|
Leased
|
|
Warehousing office furniture
|
Mt. Pleasant, Iowa
|
|
378,000
|
|
Owned
|
|
Manufacturing fireplaces (1)
|
Muscatine, Iowa
|
|
273,000
|
|
Owned
|
|
Manufacturing office furniture
|
Muscatine, Iowa
|
|
578,000
|
|
Owned
|
|
Manufacturing office furniture (1)
|
Muscatine, Iowa
|
|
810,000
|
|
Owned
|
|
Manufacturing office furniture (1)
|
Muscatine, Iowa
|
|
238,000
|
|
Owned
|
|
Manufacturing office furniture
|
Nagpur, India
|
|
355,000
|
|
Owned
|
|
Manufacturing office furniture
|
Wayland, New York
|
|
716,000
|
|
Owned
|
|
Manufacturing office furniture (1)
|
(1)
|
Also includes a regional warehouse/distribution center
|
Name
|
|
Age
|
|
Family Relationship
|
|
Position
|
|
Position Held Since
|
|
Other Business Experience During Past Five Years
|
Vincent P. Berger
|
|
47
|
|
None
|
|
Executive Vice President, HNI Corporation
President, Hearth & Home Technologies
|
|
2018
2016
|
|
Senior Vice President, Sales and Operations, Hearth & Home Technologies (2014-2016)
|
Steven M. Bradford
|
|
62
|
|
None
|
|
Senior Vice President, General Counsel and Secretary
|
|
2015
|
|
Vice President, General Counsel and Secretary (2008-2015)
|
Marshall H. Bridges
|
|
50
|
|
None
|
|
Senior Vice President and Chief Financial Officer
|
|
2018
|
|
Vice President and Chief Financial Officer (2017-2018);
Vice President, Finance, HNI Contract Furniture Group (2014-2017)
|
B. Brandon Bullock
|
|
42
|
|
None
|
|
President, The HON Company
|
|
2018
|
|
Advanced Development and Innovation Leader, Whirlpool Corporation (2017-2018);
Global Platform Leader and General Manager, Microwaves, Hong Kong, Whirlpool Corporation (2016-2017);
General Manager, Air and Water Platforms, Whirlpool Corporation (2014-2016)
|
Jeffrey D. Lorenger
|
|
54
|
|
None
|
|
Chairman
President and Chief Executive Officer
|
|
2020
2017
|
|
President, Office Furniture, HNI Corporation (2017 - 2018)
Executive Vice President, HNI Corporation (2014-2017);
President, HNI Contract Furniture Group (2014-2017)
|
Donna D. Meade
|
|
54
|
|
None
|
|
Vice President, Member and Community Relations
|
|
2014
|
|
|
Kurt A. Tjaden
|
|
56
|
|
None
|
|
President, HNI International
Senior Vice President, HNI Corporation
|
|
2017
2015
|
|
Senior Vice President and Chief Financial Officer (2015-2017);
Vice President and Chief Financial Officer (2008-2015)
|
Kristin L. Yates
|
|
54
|
|
None
|
|
President, Allsteel, Inc.
|
|
2019
|
|
President, The Gunlocke Company L.L.C. (2017 - 2019);
Vice President, Sales, Allsteel Inc. (2015-2017);
Vice President and General Manager, Architectural Product (2014-2015)
|
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
|
||||||
09/29/19 - 10/26/19
|
|
66,758
|
|
|
$
|
36.04
|
|
|
66,758
|
|
|
$
|
181,302,370
|
|
10/27/19 - 11/23/19
|
|
192,000
|
|
|
$
|
39.34
|
|
|
192,000
|
|
|
$
|
173,748,255
|
|
11/24/19 - 12/28/19
|
|
229,994
|
|
|
$
|
39.44
|
|
|
229,994
|
|
|
$
|
164,677,495
|
|
Total
|
|
488,752
|
|
|
|
|
488,752
|
|
|
|
•
|
The Corporation's share purchase program ("Program") announced November 9, 2007, providing share repurchase authorization of $200,000,000 with no specific expiration date, with increases announced November 7, 2014 and February 13, 2019, providing additional share repurchase authorizations each of $200,000,000 with no specific expiration date.
|
•
|
No repurchase plans expired or were terminated during the fourth quarter of fiscal 2019, 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.
|
(In thousands, except per share data)
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||||
Operating Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net Sales
|
$
|
2,246,947
|
|
|
$
|
2,257,895
|
|
|
$
|
2,175,882
|
|
|
$
|
2,203,489
|
|
|
$
|
2,304,419
|
|
Gross Profit as a Percentage of Net Sales
|
37.1
|
%
|
|
37.0
|
%
|
|
36.0
|
%
|
|
37.9
|
%
|
|
36.8
|
%
|
|||||
Net Income Attributable to HNI Corporation
|
$
|
110,505
|
|
|
$
|
93,377
|
|
|
$
|
89,795
|
|
|
$
|
85,577
|
|
|
$
|
105,436
|
|
Net Income Attributable to HNI Corporation as a Percentage of Net Sales
|
4.9
|
%
|
|
4.1
|
%
|
|
4.1
|
%
|
|
3.9
|
%
|
|
4.6
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Share and Per Share Data (Basic and Dilutive)
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income Attributable to HNI Corporation – basic
|
$
|
2.56
|
|
|
$
|
2.14
|
|
|
$
|
2.05
|
|
|
$
|
1.93
|
|
|
$
|
2.38
|
|
Net Income Attributable to HNI Corporation – diluted
|
$
|
2.54
|
|
|
$
|
2.11
|
|
|
$
|
2.00
|
|
|
$
|
1.88
|
|
|
$
|
2.32
|
|
Cash Dividends
|
$
|
1.21
|
|
|
$
|
1.17
|
|
|
$
|
1.13
|
|
|
$
|
1.09
|
|
|
$
|
1.045
|
|
Average Number of Common Shares Outstanding – basic
|
43,101
|
|
|
43,639
|
|
|
43,839
|
|
|
44,414
|
|
|
44,285
|
|
|||||
Average Number of Common Shares Outstanding – diluted
|
43,495
|
|
|
44,328
|
|
|
44,840
|
|
|
45,502
|
|
|
45,441
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current Assets
|
$
|
528,834
|
|
|
$
|
531,883
|
|
|
$
|
488,880
|
|
|
$
|
433,041
|
|
|
$
|
438,370
|
|
Current Liabilities
|
$
|
478,705
|
|
|
$
|
434,308
|
|
|
$
|
489,703
|
|
|
$
|
463,473
|
|
|
$
|
435,900
|
|
Working Capital
|
$
|
50,129
|
|
|
$
|
97,575
|
|
|
$
|
(823
|
)
|
|
$
|
(30,432
|
)
|
|
$
|
2,470
|
|
Total Assets
|
$
|
1,452,512
|
|
|
$
|
1,401,844
|
|
|
$
|
1,391,550
|
|
|
$
|
1,330,234
|
|
|
$
|
1,263,925
|
|
Percent Return on Beginning Assets Employed
|
10.8
|
%
|
|
9.2
|
%
|
|
5.8
|
%
|
|
10.6
|
%
|
|
13.2
|
%
|
|||||
Long-Term Debt
|
$
|
174,439
|
|
|
$
|
249,355
|
|
|
$
|
240,000
|
|
|
$
|
180,000
|
|
|
$
|
185,000
|
|
Shareholders’ Equity
|
$
|
584,044
|
|
|
$
|
562,933
|
|
|
$
|
514,068
|
|
|
$
|
500,603
|
|
|
$
|
476,954
|
|
Percent Return on Average Shareholders’ Equity
|
19.3
|
%
|
|
17.3
|
%
|
|
17.7
|
%
|
|
17.5
|
%
|
|
23.7
|
%
|
|
2019
|
|
|
Change
|
|
|
2018
|
|
|
Change
|
|
|
2017
|
|
|||
Net sales
|
$
|
2,246,947
|
|
|
(0.5
|
)%
|
|
$
|
2,257,895
|
|
|
3.8
|
%
|
|
$
|
2,175,882
|
|
Cost of sales
|
1,413,185
|
|
|
(0.7
|
)%
|
|
1,422,857
|
|
|
2.2
|
%
|
|
1,391,894
|
|
|||
Gross profit
|
833,762
|
|
|
(0.2
|
)%
|
|
835,038
|
|
|
6.5
|
%
|
|
783,988
|
|
|||
Selling and administrative expenses
|
680,049
|
|
|
(1.6
|
)%
|
|
691,140
|
|
|
2.9
|
%
|
|
671,831
|
|
|||
Gain on sale, disposal, and license of assets, net
|
—
|
|
|
—
|
%
|
|
—
|
|
|
(100.0
|
)%
|
|
(1,949
|
)
|
|||
Restructuring and impairment charges
|
2,371
|
|
|
(84.9
|
)%
|
|
15,725
|
|
|
(58.0
|
)%
|
|
37,416
|
|
|||
Operating income
|
151,342
|
|
|
18.1
|
%
|
|
128,173
|
|
|
67.1
|
%
|
|
76,690
|
|
|||
Interest expense, net
|
8,628
|
|
|
(8.7
|
)%
|
|
9,448
|
|
|
55.4
|
%
|
|
6,078
|
|
|||
Income before income taxes
|
142,714
|
|
|
20.2
|
%
|
|
118,725
|
|
|
68.1
|
%
|
|
70,612
|
|
|||
Income tax expense (benefit)
|
32,211
|
|
|
26.8
|
%
|
|
25,399
|
|
|
(231.7
|
)%
|
|
(19,286
|
)
|
|||
Net income (loss) attributable to non-controlling interest
|
(2
|
)
|
|
(96.1
|
)%
|
|
(51
|
)
|
|
(149.5
|
)%
|
|
103
|
|
|||
Net income attributable to HNI Corporation
|
$
|
110,505
|
|
|
18.3
|
%
|
|
$
|
93,377
|
|
|
4.0
|
%
|
|
$
|
89,795
|
|
As a Percentage of Net Sales:
|
|
|
|
|
|
|
|
|
|
|||||
Net sales
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
||
Gross profit
|
37.1
|
|
|
10
|
bps
|
|
37.0
|
|
|
100
|
bps
|
|
36.0
|
|
Selling and administrative expenses
|
30.3
|
|
|
-30
|
bps
|
|
30.6
|
|
|
-30
|
bps
|
|
30.9
|
|
Gain on sale, disposal, and license of assets, net
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
bps
|
|
(0.1
|
)
|
Restructuring and impairment charges
|
0.1
|
|
|
-60
|
bps
|
|
0.7
|
|
|
-100
|
bps
|
|
1.7
|
|
Operating income
|
6.7
|
|
|
100
|
bps
|
|
5.7
|
|
|
220
|
bps
|
|
3.5
|
|
Income tax expense (benefit)
|
1.4
|
|
|
30
|
bps
|
|
1.1
|
|
|
200
|
bps
|
|
(0.9
|
)
|
Net income attributable to HNI Corporation
|
4.9
|
|
|
80
|
bps
|
|
4.1
|
|
|
—
|
|
|
4.1
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Income before income taxes
|
$
|
142,714
|
|
|
$
|
118,725
|
|
|
$
|
70,612
|
|
Income tax expense (benefit)
|
$
|
32,211
|
|
|
$
|
25,399
|
|
|
$
|
(19,286
|
)
|
Effective tax rate
|
22.6
|
%
|
|
21.4
|
%
|
|
(27.3
|
)%
|
|
2019
|
|
|
Change
|
|
|
2018
|
|
|
Change
|
|
|
2017
|
|
|||
Net sales
|
$
|
1,697,186
|
|
|
(0.5
|
)%
|
|
$
|
1,706,092
|
|
|
2.7
|
%
|
|
$
|
1,660,723
|
|
Operating profit
|
$
|
103,894
|
|
|
36.8
|
%
|
|
$
|
75,965
|
|
|
51.4
|
%
|
|
$
|
50,176
|
|
Operating profit %
|
6.1
|
%
|
|
160
|
bps
|
|
4.5
|
%
|
|
150
|
bps
|
|
3.0
|
%
|
|
2019
|
|
|
Change
|
|
|
2018
|
|
|
Change
|
|
|
2017
|
|
|||
Net sales
|
$
|
549,761
|
|
|
(0.4
|
)%
|
|
$
|
551,803
|
|
|
7.1
|
%
|
|
$
|
515,159
|
|
Operating profit
|
$
|
94,329
|
|
|
3.2
|
%
|
|
$
|
91,367
|
|
|
9.2
|
%
|
|
$
|
83,649
|
|
Operating profit %
|
17.2
|
%
|
|
60
|
bps
|
|
16.6
|
%
|
|
40
|
bps
|
|
16.2
|
%
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Common shares
|
$
|
1.21
|
|
|
$
|
1.17
|
|
|
$
|
1.13
|
|
|
Less than
1 Year
|
|
1 – 3
Years
|
|
3 – 5
Years
|
|
More than
5 Years
|
|
Total
|
||||||||||
Long-term debt obligations, including estimated interest (1)
|
$
|
8,066
|
|
|
$
|
14,388
|
|
|
$
|
84,489
|
|
|
$
|
108,396
|
|
|
$
|
215,339
|
|
Finance lease obligations
|
630
|
|
|
1,118
|
|
|
548
|
|
|
—
|
|
|
2,296
|
|
|||||
Operating lease obligations
|
25,181
|
|
|
31,651
|
|
|
15,751
|
|
|
17,609
|
|
|
90,192
|
|
|||||
Purchase obligations (2)
|
73,626
|
|
|
7,046
|
|
|
2,353
|
|
|
2,455
|
|
|
85,480
|
|
|||||
Other long-term obligations (3)
|
1,931
|
|
|
9,144
|
|
|
2,709
|
|
|
23,004
|
|
|
36,788
|
|
|||||
Total
|
$
|
109,434
|
|
|
$
|
63,347
|
|
|
$
|
105,850
|
|
|
$
|
151,464
|
|
|
$
|
430,095
|
|
(1)
|
Interest has been included for all debt at the fixed or variable rate in effect as of December 28, 2019, as applicable. See "Note 8. Long-Term Debt" in the Notes to Consolidated Financial Statements for further information.
|
(2)
|
Purchase obligations include agreements to purchase goods or services that are enforceable, legally binding, and specify all significant terms, including the quantity to be purchased, the price to be paid, and the timing of the purchase.
|
(3)
|
Other long-term obligations represent payments due to members who are participants in the Corporation’s deferred and long-term incentive compensation programs, liability for unrecognized tax liabilities, and contribution and benefit payments expected to be made pursuant to the Corporation’s post-retirement benefit plans. It should be noted the obligations related to post-retirement benefit plans are not contractual and the plans could be amended at the discretion of the Corporation. The disclosure of contributions and benefit payments has been limited to 10 years, as information beyond this time period was not available. Other long-term obligations of $33.1 million, primarily insurance allowances and long-term warranty, are not included in the table above due to the Corporation's inability to predict their timing.
|
|
Page
|
(3.1)
|
|
(3.2)
|
|
(4.1)
|
|
(10.1)
|
|
(10.2)
|
|
(10.3)
|
|
(10.4)
|
|
(10.5)
|
|
(10.6)
|
|
(10.7)
|
(10.8)
|
|
(10.9)
|
|
(10.10)
|
|
(10.11)
|
|
(10.12)
|
|
(10.13)
|
|
(10.14)
|
|
(10.15)
|
|
(10.16)
|
|
(10.17)
|
|
(10.18)
|
|
(10.19)
|
|
(10.20)
|
|
(10.22)
|
|
(10.23)
|
(21)
|
|
(23.1)
|
|
(31.1)
|
|
(31.2)
|
|
(32.1)
|
|
101
|
The following materials from HNI Corporation's Annual Report on Form 10-K for the fiscal year ended December 28, 2019 are formatted in Inline XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) Consolidated Statements of Comprehensive Income; (ii) Consolidated Balance Sheets; (iii) Consolidated Statements of Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
HNI Corporation
|
|
|
|
|
|
|
Date: February 25, 2020
|
By:
|
/s/ Jeffrey D. Lorenger
|
|
|
|
Name: Jeffrey D. Lorenger
|
|
|
|
Title: Chairman, President, and Chief Executive Officer
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Jeffrey D. Lorenger
|
|
Chairman, President, and CEO, Principal Executive Officer, and Director
|
|
February 25, 2020
|
Jeffrey D. Lorenger
|
|
|
|
|
|
|
|
|
|
/s/ Marshall H. Bridges
|
|
Senior Vice President, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer
|
|
February 25, 2020
|
Marshall H. Bridges
|
|
|
|
|
|
|
|
|
|
/s/ Mary A. Bell
|
|
Director
|
|
February 25, 2020
|
Mary A. Bell
|
|
|
|
|
|
|
|
|
|
/s/ Miguel M. Calado
|
|
Director
|
|
February 25, 2020
|
Miguel M. Calado
|
|
|
|
|
|
|
|
|
|
/s/ Cheryl A. Francis
|
|
Director
|
|
February 25, 2020
|
Cheryl A. Francis
|
|
|
|
|
|
|
|
|
|
/s/ John R. Hartnett
|
|
Director
|
|
February 25, 2020
|
John R. Hartnett
|
|
|
|
|
|
|
|
|
|
/s/ Mary K. W. Jones
|
|
Director
|
|
February 25, 2020
|
Mary K. W. Jones
|
|
|
|
|
|
|
|
|
|
/s/ Larry B. Porcellato
|
|
Lead Director
|
|
February 25, 2020
|
Larry B. Porcellato
|
|
|
|
|
|
|
|
|
|
/s/ Dhanusha Sivajee
|
|
Director
|
|
February 25, 2020
|
Dhanusha Sivajee
|
|
|
|
|
|
|
|
|
|
/s/ Abbie J. Smith
|
|
Director
|
|
February 25, 2020
|
Abbie J. Smith
|
|
|
|
|
|
|
|
|
|
/s/ Brian E. Stern
|
|
Director
|
|
February 25, 2020
|
Brian E. Stern
|
|
|
|
|
|
|
|
|
|
/s/ Ronald V. Waters, III
|
|
Director
|
|
February 25, 2020
|
Ronald V. Waters, III
|
|
|
|
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of HNI Corporation;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of HNI Corporation are being made only in accordance with authorizations of management and directors of HNI Corporation; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the consolidated financial statements.
|
•
|
Evaluating the discount rate used by the Company in the income approach by comparing the Company’s inputs to the discount rate to publicly available data for comparable companies and assessing the resulting discount rate;
|
•
|
Testing the estimated reporting unit fair value, using the Company’s discount rate and forecasted cash flows, and comparing the results to the reporting unit’s carrying value per the Company’s impairment tests.
|
•
|
Assessing the guideline public companies and the selected multiples based on consideration of revenue growth, profitability, and size.
|
HNI Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
|
|||||||||||
|
|||||||||||
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net sales
|
$
|
2,246,947
|
|
|
$
|
2,257,895
|
|
|
$
|
2,175,882
|
|
Cost of sales
|
1,413,185
|
|
|
1,422,857
|
|
|
1,391,894
|
|
|||
Gross profit
|
833,762
|
|
|
835,038
|
|
|
783,988
|
|
|||
Selling and administrative expenses
|
680,049
|
|
|
691,140
|
|
|
671,831
|
|
|||
Gain on sale, disposal, and license of assets, net
|
—
|
|
|
—
|
|
|
(1,949
|
)
|
|||
Restructuring and impairment charges
|
2,371
|
|
|
15,725
|
|
|
37,416
|
|
|||
Operating income
|
151,342
|
|
|
128,173
|
|
|
76,690
|
|
|||
Interest expense, net
|
8,628
|
|
|
9,448
|
|
|
6,078
|
|
|||
Income before income taxes
|
142,714
|
|
|
118,725
|
|
|
70,612
|
|
|||
Income tax expense (benefit)
|
32,211
|
|
|
25,399
|
|
|
(19,286
|
)
|
|||
Net income
|
110,503
|
|
|
93,326
|
|
|
89,898
|
|
|||
Less: Net income (loss) attributable to non-controlling interest
|
(2
|
)
|
|
(51
|
)
|
|
103
|
|
|||
Net income attributable to HNI Corporation
|
$
|
110,505
|
|
|
$
|
93,377
|
|
|
$
|
89,795
|
|
|
|
|
|
|
|
||||||
Average number of common shares outstanding – basic
|
43,101
|
|
|
43,639
|
|
|
43,839
|
|
|||
Net income attributable to HNI Corporation per common share – basic
|
$
|
2.56
|
|
|
$
|
2.14
|
|
|
$
|
2.05
|
|
Average number of common shares outstanding – diluted
|
43,495
|
|
|
44,328
|
|
|
44,840
|
|
|||
Net income attributable to HNI Corporation per common share – diluted
|
$
|
2.54
|
|
|
$
|
2.11
|
|
|
$
|
2.00
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
$
|
61
|
|
|
$
|
(3,004
|
)
|
|
$
|
1,219
|
|
Change in unrealized gains (losses) on marketable securities, net of tax
|
251
|
|
|
(24
|
)
|
|
(27
|
)
|
|||
Change in pension and post-retirement liability, net of tax
|
(2,833
|
)
|
|
2,701
|
|
|
(463
|
)
|
|||
Change in derivative financial instruments, net of tax
|
(1,953
|
)
|
|
339
|
|
|
660
|
|
|||
Other comprehensive income (loss), net of tax
|
(4,474
|
)
|
|
12
|
|
|
1,389
|
|
|||
Comprehensive income
|
106,029
|
|
|
93,338
|
|
|
91,287
|
|
|||
Less: Comprehensive income (loss) attributable to non-controlling interest
|
(2
|
)
|
|
(51
|
)
|
|
103
|
|
|||
Comprehensive income attributable to HNI Corporation
|
$
|
106,031
|
|
|
$
|
93,389
|
|
|
$
|
91,184
|
|
HNI Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
|
|||||||
|
|
|
|
||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Assets
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
52,073
|
|
|
$
|
76,819
|
|
Short-term investments
|
1,096
|
|
|
1,327
|
|
||
Receivables
|
274,565
|
|
|
255,207
|
|
||
Inventories
|
163,465
|
|
|
157,178
|
|
||
Prepaid expenses and other current assets
|
37,635
|
|
|
41,352
|
|
||
Total Current Assets
|
528,834
|
|
|
531,883
|
|
||
|
|
|
|
||||
Property, Plant, and Equipment:
|
|
|
|
||||
Land and land improvements
|
29,394
|
|
|
28,377
|
|
||
Buildings
|
295,517
|
|
|
290,263
|
|
||
Machinery and equipment
|
581,225
|
|
|
565,884
|
|
||
Construction in progress
|
20,881
|
|
|
28,443
|
|
||
|
927,017
|
|
|
912,967
|
|
||
Less accumulated depreciation
|
545,510
|
|
|
528,034
|
|
||
Net Property, Plant, and Equipment
|
381,507
|
|
|
384,933
|
|
||
|
|
|
|
||||
Right-of-use Operating / Finance Leases
|
75,012
|
|
|
—
|
|
||
|
|
|
|
||||
Goodwill and Other Intangible Assets
|
445,709
|
|
|
463,290
|
|
||
|
|
|
|
||||
Deferred Income Taxes
|
176
|
|
|
1,569
|
|
||
|
|
|
|
||||
Other Assets
|
21,274
|
|
|
20,169
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
1,452,512
|
|
|
$
|
1,401,844
|
|
HNI Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except par value)
|
|||||||
|
|
|
|
||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Liabilities and Equity
|
|
|
|
|
|
||
Current Liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
453,202
|
|
|
$
|
428,865
|
|
Current maturities of long-term debt
|
790
|
|
|
679
|
|
||
Current maturities of other long-term obligations
|
1,931
|
|
|
4,764
|
|
||
Current lease obligations - operating / finance
|
22,782
|
|
|
—
|
|
||
Total Current Liabilities
|
478,705
|
|
|
434,308
|
|
||
|
|
|
|
||||
Long-Term Debt
|
174,439
|
|
|
249,355
|
|
||
|
|
|
|
||||
Long-Term Lease Obligations - Operating / Finance
|
59,814
|
|
|
—
|
|
||
|
|
|
|
||||
Other Long-Term Liabilities
|
67,990
|
|
|
72,767
|
|
||
|
|
|
|
||||
Deferred Income Taxes
|
87,196
|
|
|
82,155
|
|
||
|
|
|
|
||||
Equity:
|
|
|
|
||||
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:
|
|
|
|
||||
December 28, 2019 - 42,595 shares; December 29, 2018 - 43,582 shares
|
42,595
|
|
|
43,582
|
|
||
|
|
|
|
||||
Additional paid-in capital
|
19,799
|
|
|
18,041
|
|
||
Retained earnings
|
529,723
|
|
|
504,909
|
|
||
Accumulated other comprehensive income (loss)
|
(8,073
|
)
|
|
(3,599
|
)
|
||
Total HNI Corporation shareholders' equity
|
584,044
|
|
|
562,933
|
|
||
|
|
|
|
||||
Non-controlling interest
|
324
|
|
|
326
|
|
||
|
|
|
|
||||
Total Equity
|
584,368
|
|
|
563,259
|
|
||
|
|
|
|
||||
Total Liabilities and Equity
|
$
|
1,452,512
|
|
|
$
|
1,401,844
|
|
|
Common Stock
|
|
|
Additional Paid-in Capital
|
|
|
Retained Earnings
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
Non-controlling Interest
|
|
|
Total Shareholders' Equity
|
|
||||||
Balance, December 31, 2016
|
$
|
44,079
|
|
|
$
|
—
|
|
|
$
|
461,524
|
|
|
$
|
(5,000
|
)
|
|
$
|
406
|
|
|
$
|
501,009
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
89,795
|
|
|
—
|
|
|
103
|
|
|
89,898
|
|
||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
1,389
|
|
|
—
|
|
|
1,389
|
|
||||||
Cash dividends; $1.130 per share
|
—
|
|
|
—
|
|
|
(49,557
|
)
|
|
—
|
|
|
—
|
|
|
(49,557
|
)
|
||||||
Common shares – treasury:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Shares purchased
|
(1,463
|
)
|
|
(22,958
|
)
|
|
(34,466
|
)
|
|
—
|
|
|
—
|
|
|
(58,887
|
)
|
||||||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax
|
738
|
|
|
29,987
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,725
|
|
||||||
Balance, December 30, 2017
|
$
|
43,354
|
|
|
$
|
7,029
|
|
|
$
|
467,296
|
|
|
$
|
(3,611
|
)
|
|
$
|
509
|
|
|
$
|
514,577
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
93,377
|
|
|
—
|
|
|
(51
|
)
|
|
93,326
|
|
||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||
Change in ownership of non-controlling interest
|
—
|
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
(132
|
)
|
|
(175
|
)
|
||||||
Cash dividends; $1.170 per share
|
—
|
|
|
—
|
|
|
(51,085
|
)
|
|
—
|
|
|
—
|
|
|
(51,085
|
)
|
||||||
Common shares – treasury:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Shares purchased
|
(755
|
)
|
|
(24,033
|
)
|
|
(4,636
|
)
|
|
—
|
|
|
—
|
|
|
(29,424
|
)
|
||||||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax
|
983
|
|
|
35,045
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,028
|
|
||||||
Balance, December 29, 2018
|
$
|
43,582
|
|
|
$
|
18,041
|
|
|
$
|
504,909
|
|
|
$
|
(3,599
|
)
|
|
$
|
326
|
|
|
$
|
563,259
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
110,505
|
|
|
—
|
|
|
(2
|
)
|
|
110,503
|
|
||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,735
|
)
|
|
—
|
|
|
(3,735
|
)
|
||||||
Reclassification of Stranded Tax Effects (ASU 2018-02)
|
—
|
|
|
—
|
|
|
739
|
|
|
(739
|
)
|
|
—
|
|
|
—
|
|
||||||
Impact of Implementation of Lease Guidance
|
—
|
|
|
—
|
|
|
2,999
|
|
|
—
|
|
|
—
|
|
|
2,999
|
|
||||||
Cash dividends; $1.210 per share
|
—
|
|
|
—
|
|
|
(52,232
|
)
|
|
—
|
|
|
—
|
|
|
(52,232
|
)
|
||||||
Common shares – treasury:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Shares purchased
|
(2,286
|
)
|
|
(44,424
|
)
|
|
(37,197
|
)
|
|
—
|
|
|
—
|
|
|
(83,907
|
)
|
||||||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax
|
1,299
|
|
|
46,182
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47,481
|
|
||||||
Balance, December 28, 2019
|
$
|
42,595
|
|
|
$
|
19,799
|
|
|
$
|
529,723
|
|
|
$
|
(8,073
|
)
|
|
$
|
324
|
|
|
$
|
584,368
|
|
HNI Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
|
|||||||||||
|
|||||||||||
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net Cash Flows From (To) Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
110,503
|
|
|
$
|
93,326
|
|
|
$
|
89,898
|
|
Non-cash items included in net income:
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
77,427
|
|
|
74,788
|
|
|
72,872
|
|
|||
Other post-retirement and post-employment benefits
|
1,475
|
|
|
1,767
|
|
|
1,592
|
|
|||
Stock-based compensation
|
6,830
|
|
|
7,317
|
|
|
7,750
|
|
|||
Operating / finance lease interest and amortization
|
22,936
|
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
6,750
|
|
|
3,197
|
|
|
(33,606
|
)
|
|||
Loss on sale and retirement of long-lived assets, net
|
2,014
|
|
|
16,264
|
|
|
30,892
|
|
|||
Other – net
|
3,593
|
|
|
(1,736
|
)
|
|
(1,949
|
)
|
|||
Net increase (decrease) in operating assets and liabilities, net of divestitures
|
(3,280
|
)
|
|
(10,729
|
)
|
|
(29,409
|
)
|
|||
Increase (decrease) in other liabilities
|
(8,868
|
)
|
|
2,236
|
|
|
(4,891
|
)
|
|||
Net cash flows from (to) operating activities
|
219,380
|
|
|
186,430
|
|
|
133,149
|
|
|||
|
|
|
|
|
|
||||||
Net Cash Flows From (To) Investing Activities:
|
|
|
|
|
|
|
|
|
|||
Capital expenditures
|
(60,826
|
)
|
|
(55,648
|
)
|
|
(109,243
|
)
|
|||
Proceeds from sale and license of property, plant, and equipment, and intangibles
|
327
|
|
|
23,767
|
|
|
9,009
|
|
|||
Acquisition spending, net of cash acquired
|
—
|
|
|
(2,850
|
)
|
|
(898
|
)
|
|||
Capitalized software
|
(6,059
|
)
|
|
(8,048
|
)
|
|
(18,148
|
)
|
|||
Purchase of investments
|
(6,702
|
)
|
|
(2,676
|
)
|
|
(3,451
|
)
|
|||
Sales or maturities of investments
|
4,845
|
|
|
3,100
|
|
|
3,197
|
|
|||
Other – net
|
5,520
|
|
|
1,135
|
|
|
1,510
|
|
|||
Net cash flows from (to) investing activities
|
(62,895
|
)
|
|
(41,220
|
)
|
|
(118,024
|
)
|
|||
|
|
|
|
|
|
||||||
Net Cash Flows From (To) Financing Activities:
|
|
|
|
|
|
|
|
|
|||
Payments of long-term debt
|
(215,934
|
)
|
|
(348,987
|
)
|
|
(276,736
|
)
|
|||
Proceeds from long-term debt
|
141,035
|
|
|
323,075
|
|
|
339,337
|
|
|||
Dividends paid
|
(52,232
|
)
|
|
(51,085
|
)
|
|
(49,557
|
)
|
|||
Purchase of HNI Corporation common stock
|
(83,887
|
)
|
|
(30,452
|
)
|
|
(57,505
|
)
|
|||
Proceeds from sales of HNI Corporation common stock
|
30,473
|
|
|
19,606
|
|
|
14,224
|
|
|||
Other – net
|
(686
|
)
|
|
(3,896
|
)
|
|
2,148
|
|
|||
Net cash flows from (to) financing activities
|
(181,231
|
)
|
|
(91,739
|
)
|
|
(28,089
|
)
|
|||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
(24,746
|
)
|
|
53,471
|
|
|
(12,964
|
)
|
|||
Cash and cash equivalents at beginning of period
|
76,819
|
|
|
23,348
|
|
|
36,312
|
|
|||
Cash and cash equivalents at end of period
|
$
|
52,073
|
|
|
$
|
76,819
|
|
|
$
|
23,348
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||||||||||||||||||
|
Cash and cash equivalents
|
|
Short-term investments
|
|
Other Assets
|
|
Cash and cash equivalents
|
|
Short-term investments
|
|
Other Assets
|
||||||||||||
Debt securities
|
$
|
—
|
|
|
$
|
1,096
|
|
|
$
|
11,566
|
|
|
$
|
—
|
|
|
$
|
1,327
|
|
|
$
|
10,677
|
|
Equity investment
|
—
|
|
|
—
|
|
|
1,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Cash and money market accounts
|
52,073
|
|
|
—
|
|
|
—
|
|
|
76,819
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
52,073
|
|
|
$
|
1,096
|
|
|
$
|
13,066
|
|
|
$
|
76,819
|
|
|
$
|
1,327
|
|
|
$
|
10,677
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
Amortized cost basis of debt securities
|
$
|
12,542
|
|
|
$
|
12,202
|
|
|
|
Balance at beginning of period
|
|
Adjustments to allowance
|
|
Amounts written off, net of recoveries and other adjustments
|
|
Balance at end of period
|
||||||||
Year ended December 28, 2019
|
|
$
|
3,867
|
|
|
$
|
508
|
|
|
$
|
816
|
|
|
$
|
3,559
|
|
Year ended December 29, 2018
|
|
$
|
1,904
|
|
|
$
|
2,440
|
|
|
$
|
477
|
|
|
$
|
3,867
|
|
Year ended December 30, 2017
|
|
$
|
2,140
|
|
|
$
|
846
|
|
|
$
|
1,082
|
|
|
$
|
1,904
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
Finished products
|
$
|
118,633
|
|
|
$
|
97,398
|
|
Materials and work in process
|
75,526
|
|
|
94,161
|
|
||
Last-in, first-out ("LIFO") allowance
|
(30,694
|
)
|
|
(34,381
|
)
|
||
Total inventories
|
$
|
163,465
|
|
|
$
|
157,178
|
|
|
|
|
|
||||
|
|
|
|
||||
Inventory valued by the LIFO costing method
|
65
|
%
|
|
81
|
%
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Depreciation expense
|
$
|
53,022
|
|
|
$
|
51,063
|
|
|
$
|
56,494
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
Trade accounts payable
|
$
|
227,557
|
|
|
$
|
221,395
|
|
Compensation
|
53,147
|
|
|
52,227
|
|
||
Profit sharing and retirement expense
|
28,264
|
|
|
28,300
|
|
||
Marketing expenses
|
46,344
|
|
|
36,529
|
|
||
Freight
|
15,998
|
|
|
13,892
|
|
||
Other accrued expenses
|
81,892
|
|
|
76,522
|
|
||
|
$
|
453,202
|
|
|
$
|
428,865
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Balance at beginning of period
|
$
|
15,450
|
|
|
$
|
15,388
|
|
|
$
|
15,250
|
|
Accruals for warranties issued during period
|
19,600
|
|
|
22,697
|
|
|
20,075
|
|
|||
Adjustments related to pre-existing warranties
|
906
|
|
|
233
|
|
|
194
|
|
|||
Settlements made during the period
|
(20,091
|
)
|
|
(22,868
|
)
|
|
(20,131
|
)
|
|||
Balance at end of period
|
$
|
15,865
|
|
|
$
|
15,450
|
|
|
$
|
15,388
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
Current - in the next twelve months
|
$
|
7,940
|
|
|
$
|
9,455
|
|
Long-term - beyond one year
|
7,925
|
|
|
5,995
|
|
||
|
$
|
15,865
|
|
|
$
|
15,450
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Research and development costs
|
$
|
34,699
|
|
|
$
|
33,420
|
|
|
$
|
31,846
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Freight expense
|
$
|
123,667
|
|
|
$
|
134,190
|
|
|
$
|
119,096
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Numerator:
|
|
|
|
|
|
|
|||||
Numerator for both basic and diluted EPS attributable to HNI Corporation net income
|
$
|
110,505
|
|
|
$
|
93,377
|
|
|
$
|
89,795
|
|
Denominators:
|
|
|
|
|
|
||||||
Denominator for basic EPS weighted-average common shares outstanding
|
43,101
|
|
|
43,639
|
|
|
43,839
|
|
|||
Potentially dilutive shares from stock-based compensation plans
|
394
|
|
|
689
|
|
|
1,001
|
|
|||
Denominator for diluted EPS
|
43,495
|
|
|
44,328
|
|
|
44,840
|
|
|||
Earnings per share – basic
|
$
|
2.56
|
|
|
$
|
2.14
|
|
|
$
|
2.05
|
|
Earnings per share – diluted
|
$
|
2.54
|
|
|
$
|
2.11
|
|
|
$
|
2.00
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Common stock equivalents excluded because their inclusion would be anti-dilutive
|
2,131
|
|
|
1,508
|
|
|
809
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
General, auto, product, and workers' compensation liabilities
|
$
|
26,233
|
|
|
$
|
30,227
|
|
|
Segment
|
2019
|
|
|
2018
|
|
||
Supplies-driven channel
|
Office Furniture
|
$
|
891,997
|
|
|
$
|
904,292
|
|
Contract channel
|
Office Furniture
|
805,189
|
|
|
801,800
|
|
||
Hearth
|
Hearth Products
|
549,761
|
|
|
551,803
|
|
||
Net sales
|
|
$
|
2,246,947
|
|
|
$
|
2,257,895
|
|
|
December 28,
2019 |
|
December 29,
2018 |
||||
Trade receivables (1)
|
$
|
278,124
|
|
|
$
|
259,075
|
|
Contract assets (current) (2)
|
$
|
857
|
|
|
$
|
529
|
|
Contract assets (long-term) (3)
|
$
|
2,700
|
|
|
$
|
2,188
|
|
Contract liabilities (4)
|
$
|
54,972
|
|
|
$
|
44,858
|
|
|
Contract assets increase (decrease)
|
|
Contract liabilities (increase) decrease
|
||||
Contract assets recognized
|
$
|
1,313
|
|
|
$
|
—
|
|
Reclassification of contract assets to contra-revenue
|
(473
|
)
|
|
—
|
|
||
Contract liabilities recognized and recorded to contra-revenue as a result of performance obligations satisfied
|
—
|
|
|
(147,830
|
)
|
||
Contract liabilities paid
|
—
|
|
|
138,015
|
|
||
Cash received in advance and not recognized as revenue
|
—
|
|
|
(67,938
|
)
|
||
Reclassification of cash received in advance to revenue as a result of performance obligations satisfied
|
—
|
|
|
67,639
|
|
||
Net change
|
$
|
840
|
|
|
$
|
(10,114
|
)
|
|
Contract assets increase (decrease)
|
|
Contract liabilities (increase) decrease
|
||||
Contract assets recognized
|
$
|
2,100
|
|
|
$
|
—
|
|
Reclassification of contract assets to contra-revenue
|
(483
|
)
|
|
—
|
|
||
Contract asset impairment
|
(1,550
|
)
|
|
—
|
|
||
Contract liabilities recognized and recorded to contra-revenue as a result of performance obligations satisfied
|
—
|
|
|
(127,454
|
)
|
||
Contract liabilities paid
|
—
|
|
|
132,909
|
|
||
Cash received in advance and not recognized as revenue
|
—
|
|
|
(54,167
|
)
|
||
Reclassification of cash received in advance to revenue as a result of performance obligations satisfied
|
—
|
|
|
58,304
|
|
||
Impact of business combination
|
—
|
|
|
77
|
|
||
Net change
|
$
|
67
|
|
|
$
|
9,669
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Cost of sales - accelerated depreciation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,327
|
|
|
|
|
|
|
|
||||||
Restructuring charges
|
$
|
2,371
|
|
|
$
|
2,325
|
|
|
$
|
6,205
|
|
Goodwill and long-lived asset impairments
|
—
|
|
|
15,200
|
|
|
20,947
|
|
|||
Valuation allowance of long-term note receivable
|
—
|
|
|
(1,800
|
)
|
|
10,264
|
|
|||
Restructuring and impairment charges
|
$
|
2,371
|
|
|
$
|
15,725
|
|
|
$
|
37,416
|
|
|
Severance Costs
|
|
Facility Exit Costs & Other
|
|
Total
|
||||||
Restructuring allowance as of December 31, 2016
|
$
|
2,704
|
|
|
$
|
—
|
|
|
$
|
2,704
|
|
Restructuring charges
|
1,436
|
|
|
4,769
|
|
|
6,205
|
|
|||
Cash payments
|
(2,797
|
)
|
|
(4,253
|
)
|
|
(7,050
|
)
|
|||
Restructuring allowance as of December 30, 2017
|
1,343
|
|
|
516
|
|
|
1,859
|
|
|||
Restructuring charges
|
355
|
|
|
1,970
|
|
|
2,325
|
|
|||
Cash payments
|
(1,562
|
)
|
|
(2,336
|
)
|
|
(3,898
|
)
|
|||
Restructuring allowance as of December 29, 2018
|
136
|
|
|
150
|
|
|
286
|
|
|||
Restructuring charges
|
1,977
|
|
|
394
|
|
|
2,371
|
|
|||
Cash payments
|
(1,451
|
)
|
|
(272
|
)
|
|
(1,723
|
)
|
|||
Restructuring allowance as of December 28, 2019
|
$
|
662
|
|
|
$
|
272
|
|
|
$
|
934
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Cash paid for:
|
|
|
|
|
|
||||||
Interest paid, net of capitalized interest
|
$
|
9,867
|
|
|
$
|
9,882
|
|
|
$
|
6,236
|
|
Income taxes paid
|
$
|
21,181
|
|
|
$
|
11,465
|
|
|
$
|
13,733
|
|
Changes in accrued expenses due to:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
$
|
(8,476
|
)
|
|
$
|
5,895
|
|
|
$
|
(10,370
|
)
|
Purchases of capitalized software
|
$
|
653
|
|
|
$
|
(2,497
|
)
|
|
$
|
(237
|
)
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
Goodwill
|
$
|
270,820
|
|
|
$
|
270,788
|
|
Definite-lived intangible assets
|
146,040
|
|
|
163,714
|
|
||
Indefinite-lived intangible assets
|
28,849
|
|
|
28,788
|
|
||
Total goodwill and other intangible assets
|
$
|
445,709
|
|
|
$
|
463,290
|
|
|
Office Furniture
|
|
Hearth Products
|
|
Total
|
||||||
Balance as of December 30, 2017
|
|
|
|
|
|
||||||
Goodwill
|
$
|
128,657
|
|
|
$
|
183,199
|
|
|
$
|
311,856
|
|
Accumulated impairment losses
|
(32,208
|
)
|
|
(143
|
)
|
|
(32,351
|
)
|
|||
Net goodwill balance as of December 30, 2017
|
$
|
96,449
|
|
|
$
|
183,056
|
|
|
$
|
279,505
|
|
|
|
|
|
|
|
||||||
Goodwill acquired during the year
|
—
|
|
|
3,463
|
|
|
3,463
|
|
|||
Impairment losses
|
(12,168
|
)
|
|
—
|
|
|
(12,168
|
)
|
|||
Foreign currency translation adjustment
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|||
|
|
|
|
|
|
||||||
Balance as of December 29, 2018
|
|
|
|
|
|
|
|
|
|||
Goodwill
|
128,645
|
|
|
186,662
|
|
|
315,307
|
|
|||
Accumulated impairment losses
|
(44,376
|
)
|
|
(143
|
)
|
|
(44,519
|
)
|
|||
Net goodwill balance as of December 29, 2018
|
$
|
84,269
|
|
|
$
|
186,519
|
|
|
$
|
270,788
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
32
|
|
|
—
|
|
|
32
|
|
|||
|
|
|
|
|
|
||||||
Balance as of December 28, 2019
|
|
|
|
|
|
|
|
|
|||
Goodwill
|
128,677
|
|
|
186,662
|
|
|
315,339
|
|
|||
Accumulated impairment losses
|
(44,376
|
)
|
|
(143
|
)
|
|
(44,519
|
)
|
|||
Net goodwill balance as of December 28, 2019
|
$
|
84,301
|
|
|
$
|
186,519
|
|
|
$
|
270,820
|
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||||||||||||||||||
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Patents
|
|
$
|
40
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
34
|
|
|
$
|
6
|
|
Software
|
|
176,836
|
|
|
67,541
|
|
|
109,295
|
|
|
170,274
|
|
|
49,561
|
|
|
120,713
|
|
||||||
Trademarks and trade names
|
|
7,564
|
|
|
3,381
|
|
|
4,183
|
|
|
7,564
|
|
|
2,721
|
|
|
4,843
|
|
||||||
Customer lists and other
|
|
104,004
|
|
|
71,442
|
|
|
32,562
|
|
|
103,840
|
|
|
65,688
|
|
|
38,152
|
|
||||||
Net definite-lived intangible assets
|
|
$
|
288,444
|
|
|
$
|
142,404
|
|
|
$
|
146,040
|
|
|
$
|
281,718
|
|
|
$
|
118,004
|
|
|
$
|
163,714
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Capitalized software
|
$
|
18,130
|
|
|
$
|
17,109
|
|
|
$
|
9,389
|
|
Other definite-lived intangibles
|
$
|
6,275
|
|
|
$
|
6,615
|
|
|
$
|
6,989
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|||||
Amortization expense
|
$
|
23.8
|
|
|
$
|
22.7
|
|
|
$
|
19.7
|
|
|
$
|
17.5
|
|
|
$
|
16.5
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
Trademarks and trade names
|
$
|
28,849
|
|
|
$
|
28,788
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
Revolving credit facility with interest at a variable rate
(December 28, 2019 - 2.8%; December 29, 2018 - 3.5%)
|
$
|
75,000
|
|
|
$
|
150,000
|
|
Fixed rate notes due in 2025 with an interest rate of 4.22%
|
50,000
|
|
|
50,000
|
|
||
Fixed rate notes due in 2028 with an interest rate of 4.40%
|
50,000
|
|
|
50,000
|
|
||
Other amounts
|
790
|
|
|
679
|
|
||
Deferred debt issuance costs
|
(561
|
)
|
|
(645
|
)
|
||
Total debt
|
175,229
|
|
|
250,034
|
|
||
Less: Current maturities of long-term debt
|
790
|
|
|
679
|
|
||
Long-term debt
|
$
|
174,439
|
|
|
$
|
249,355
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|
Thereafter
|
|
||||||
Maturities of long-term debt
|
$
|
790
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75,000
|
|
|
$
|
—
|
|
|
$
|
100,000
|
|
•
|
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.
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
20,122
|
|
|
$
|
15,663
|
|
|
$
|
9,501
|
|
State
|
5,418
|
|
|
4,877
|
|
|
3,408
|
|
|||
Foreign
|
662
|
|
|
936
|
|
|
789
|
|
|||
Current provision
|
26,202
|
|
|
21,476
|
|
|
13,698
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
4,140
|
|
|
4,002
|
|
|
(35,914
|
)
|
|||
State
|
1,634
|
|
|
1,320
|
|
|
2,552
|
|
|||
Foreign
|
235
|
|
|
(1,399
|
)
|
|
378
|
|
|||
Deferred provision
|
6,009
|
|
|
3,923
|
|
|
(32,984
|
)
|
|||
Total income tax expense
|
$
|
32,211
|
|
|
$
|
25,399
|
|
|
$
|
(19,286
|
)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Federal statutory tax expense
|
$
|
29,970
|
|
|
$
|
24,943
|
|
|
$
|
24,678
|
|
State taxes, net of federal tax effect
|
5,159
|
|
|
3,997
|
|
|
2,197
|
|
|||
Credit for increasing research activities
|
(4,050
|
)
|
|
(3,950
|
)
|
|
(3,407
|
)
|
|||
Deduction related to domestic production activities
|
—
|
|
|
—
|
|
|
(1,537
|
)
|
|||
Valuation allowance
|
98
|
|
|
(1,141
|
)
|
|
4,232
|
|
|||
Federal rate adjustment to deferred taxes
|
—
|
|
|
—
|
|
|
(45,386
|
)
|
|||
Equity based compensation
|
639
|
|
|
(666
|
)
|
|
(1,544
|
)
|
|||
Change in uncertain tax positions
|
(357
|
)
|
|
766
|
|
|
(163
|
)
|
|||
Foreign income tax rate differential
|
596
|
|
|
124
|
|
|
2,094
|
|
|||
Other – net
|
156
|
|
|
1,326
|
|
|
(450
|
)
|
|||
Total income tax expense
|
$
|
32,211
|
|
|
$
|
25,399
|
|
|
$
|
(19,286
|
)
|
|
December 28,
2019 |
|
December 29,
2018 |
||||
Deferred Taxes
|
|
|
|
||||
Allowance for doubtful accounts
|
$
|
746
|
|
|
$
|
897
|
|
Compensation
|
7,243
|
|
|
6,419
|
|
||
Inventory differences
|
1,445
|
|
|
2,498
|
|
||
Marketing accrual
|
1,238
|
|
|
1,260
|
|
||
Stock-based compensation
|
7,680
|
|
|
8,456
|
|
||
Accrued post-retirement benefit obligations
|
6,287
|
|
|
5,500
|
|
||
Vacation accrual
|
2,687
|
|
|
2,783
|
|
||
Warranty accrual
|
3,842
|
|
|
3,761
|
|
||
Net operating loss carryforward
|
4,522
|
|
|
4,790
|
|
||
Capital loss carryforward
|
2,011
|
|
|
2,001
|
|
||
Lease liability
|
17,212
|
|
|
—
|
|
||
Other – net
|
8,916
|
|
|
11,413
|
|
||
Total deferred tax assets
|
$
|
63,829
|
|
|
$
|
49,778
|
|
Deferred income
|
(4,838
|
)
|
|
(4,707
|
)
|
||
Goodwill and other intangible assets
|
(54,951
|
)
|
|
(52,468
|
)
|
||
Prepaids
|
(6,867
|
)
|
|
(6,536
|
)
|
||
Right of use asset
|
(16,251
|
)
|
|
—
|
|
||
Tax over book depreciation
|
(57,682
|
)
|
|
(59,500
|
)
|
||
Total deferred tax liabilities
|
$
|
(140,589
|
)
|
|
$
|
(123,211
|
)
|
Valuation allowance
|
(10,260
|
)
|
|
(7,153
|
)
|
||
Total net deferred tax liabilities
|
$
|
(87,020
|
)
|
|
$
|
(80,586
|
)
|
|
|
|
|
|
|
||
Long-term net deferred tax assets
|
176
|
|
|
1,569
|
|
||
Long-term net deferred tax liabilities
|
(87,196
|
)
|
|
(82,155
|
)
|
||
Total net deferred tax liabilities
|
$
|
(87,020
|
)
|
|
$
|
(80,586
|
)
|
|
|
Balance at beginning of period
|
|
Charged to expenses
|
|
Adjustments to balance sheet
|
|
Balance at end of period
|
||||||||
Year ended December 28, 2019
|
|
$
|
7,153
|
|
|
$
|
98
|
|
|
$
|
3,009
|
|
|
$
|
10,260
|
|
Year ended December 29, 2018
|
|
$
|
8,664
|
|
|
$
|
(839
|
)
|
|
$
|
(672
|
)
|
|
$
|
7,153
|
|
Year ended December 30, 2017
|
|
$
|
4,159
|
|
|
$
|
4,505
|
|
|
$
|
—
|
|
|
$
|
8,664
|
|
|
2019
|
|
|
2018
|
|
||
Balance at beginning of period
|
$
|
2,937
|
|
|
$
|
2,524
|
|
Increases in positions taken in a prior period
|
14
|
|
|
262
|
|
||
Decreases in positions taken in a prior period
|
(127
|
)
|
|
—
|
|
||
New positions taken in a current period
|
562
|
|
|
529
|
|
||
Decrease due to settlements
|
—
|
|
|
(9
|
)
|
||
Decrease due to lapse of statute of limitations
|
(808
|
)
|
|
(369
|
)
|
||
Balance at end of period
|
$
|
2,578
|
|
|
$
|
2,937
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Interest, penalties, and (benefits)
|
$
|
4
|
|
|
$
|
92
|
|
|
$
|
(25
|
)
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
Liability related to unrecognized tax benefits
|
$
|
279
|
|
|
$
|
275
|
|
|
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 December 28, 2019
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents (including money market funds) (1)
|
$
|
52,073
|
|
|
$
|
52,073
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government securities (2)
|
$
|
6,339
|
|
|
$
|
—
|
|
|
$
|
6,339
|
|
|
$
|
—
|
|
Corporate bonds (2)
|
$
|
6,323
|
|
|
$
|
—
|
|
|
$
|
6,323
|
|
|
$
|
—
|
|
Derivative financial instruments (3)
|
$
|
276
|
|
|
$
|
—
|
|
|
$
|
276
|
|
|
$
|
—
|
|
Deferred stock-based compensation (4)
|
$
|
7,503
|
|
|
$
|
—
|
|
|
$
|
7,503
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Balance as of December 29, 2018
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents (including money market funds) (1)
|
$
|
76,819
|
|
|
$
|
76,819
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government securities (2)
|
$
|
7,384
|
|
|
$
|
—
|
|
|
$
|
7,384
|
|
|
$
|
—
|
|
Corporate bonds (2)
|
$
|
4,620
|
|
|
$
|
—
|
|
|
$
|
4,620
|
|
|
$
|
—
|
|
Derivative financial instruments (3)
|
$
|
3,797
|
|
|
$
|
—
|
|
|
$
|
3,797
|
|
|
$
|
—
|
|
Deferred stock-based compensation (4)
|
$
|
7,857
|
|
|
$
|
—
|
|
|
$
|
7,857
|
|
|
$
|
—
|
|
|
Foreign Currency
Translation Adjustment
|
|
Unrealized Gains
(Losses) on Debt
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
|
1,219
|
|
|
(6
|
)
|
|
(733
|
)
|
|
714
|
|
|
1,194
|
|
|||||
Tax (expense) or benefit
|
—
|
|
|
(21
|
)
|
|
270
|
|
|
(263
|
)
|
|
(14
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
209
|
|
|
209
|
|
|||||
Balance as of December 30, 2017
|
$
|
31
|
|
|
$
|
(132
|
)
|
|
$
|
(5,630
|
)
|
|
$
|
2,120
|
|
|
$
|
(3,611
|
)
|
Other comprehensive income (loss) before reclassifications
|
(3,004
|
)
|
|
(31
|
)
|
|
3,531
|
|
|
1,488
|
|
|
1,984
|
|
|||||
Tax (expense) or benefit
|
—
|
|
|
7
|
|
|
(830
|
)
|
|
(350
|
)
|
|
(1,173
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(799
|
)
|
|
(799
|
)
|
|||||
Balance as of December 29, 2018
|
$
|
(2,973
|
)
|
|
$
|
(156
|
)
|
|
$
|
(2,929
|
)
|
|
$
|
2,459
|
|
|
$
|
(3,599
|
)
|
Other comprehensive income (loss) before reclassifications
|
61
|
|
|
318
|
|
|
(2,254
|
)
|
|
(1,739
|
)
|
|
(3,614
|
)
|
|||||
Tax (expense) or benefit
|
—
|
|
|
(67
|
)
|
|
606
|
|
|
403
|
|
|
942
|
|
|||||
Reclassification of stranded tax impact
|
—
|
|
|
—
|
|
|
(1,185
|
)
|
|
446
|
|
|
(739
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,063
|
)
|
|
(1,063
|
)
|
|||||
Balance as of December 28, 2019
|
$
|
(2,912
|
)
|
|
$
|
95
|
|
|
$
|
(5,762
|
)
|
|
$
|
506
|
|
|
$
|
(8,073
|
)
|
Details about Accumulated Other Comprehensive Income (Loss) Components
|
|
Affected Line Item in the Statement Where Net Income is Presented
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Derivative financial instruments
|
|
|
|
|
|
|
|
|
||||||
Interest rate swap
|
|
Interest expense, net
|
|
$
|
1,392
|
|
|
$
|
1,045
|
|
|
$
|
(330
|
)
|
|
|
Income tax expense
|
|
(329
|
)
|
|
(246
|
)
|
|
121
|
|
|||
|
|
Net of tax
|
|
$
|
1,063
|
|
|
$
|
799
|
|
|
$
|
(209
|
)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Director Plan issued shares of common stock
|
37,269
|
|
|
27,745
|
|
|
27,196
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Dividends per common shares
|
$
|
1.21
|
|
|
$
|
1.17
|
|
|
$
|
1.13
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Shares of common stock issued
|
76,041
|
|
|
74,020
|
|
|
74,694
|
|
|||
Average price per share
|
$
|
30.67
|
|
|
$
|
32.19
|
|
|
$
|
35.22
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Shares repurchased
|
2,286,200
|
|
|
755,221
|
|
|
1,462,936
|
|
|||
Average price per share
|
$
|
36.70
|
|
|
$
|
38.96
|
|
|
$
|
40.25
|
|
|
|
|
|
|
|
||||||
Cash purchase price
|
$
|
(83,907
|
)
|
|
$
|
(29,424
|
)
|
|
$
|
(58,887
|
)
|
Purchases unsettled as of quarter end
|
374
|
|
|
354
|
|
|
1,382
|
|
|||
Prior year purchases settled in current year
|
(354
|
)
|
|
(1,382
|
)
|
|
—
|
|
|||
Shares repurchased per cash flow
|
$
|
(83,887
|
)
|
|
$
|
(30,452
|
)
|
|
$
|
(57,505
|
)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Compensation cost
|
$
|
6,830
|
|
|
$
|
7,317
|
|
|
$
|
7,750
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Income tax benefit
|
$
|
1,545
|
|
|
$
|
1,582
|
|
|
$
|
2,581
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Expected term
|
5 years
|
|
|
5 years
|
|
|
6 years
|
|
Expected volatility (weighted-average)
|
33.86
|
%
|
|
34.12
|
%
|
|
38.07
|
%
|
Expected dividend yield (weighted-average)
|
2.98
|
%
|
|
2.97
|
%
|
|
2.36
|
%
|
Risk-free interest rate (weighted-average)
|
2.52
|
%
|
|
2.66
|
%
|
|
2.17
|
%
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|||
Outstanding as of December 31, 2016
|
3,504,335
|
|
|
$
|
31.68
|
|
Granted
|
537,795
|
|
|
46.61
|
|
|
Exercised
|
(446,817
|
)
|
|
25.55
|
|
|
Forfeited or Expired
|
(33,029
|
)
|
|
40.81
|
|
|
Outstanding as of December 30, 2017
|
3,562,284
|
|
|
$
|
34.63
|
|
Granted
|
788,301
|
|
|
38.53
|
|
|
Exercised
|
(647,759
|
)
|
|
26.28
|
|
|
Forfeited or Expired
|
(75,821
|
)
|
|
38.36
|
|
|
Outstanding as of December 29, 2018
|
3,627,005
|
|
|
$
|
36.89
|
|
Granted
|
637,763
|
|
|
39.64
|
|
|
Exercised
|
(921,900
|
)
|
|
30.29
|
|
|
Forfeited or Expired
|
(120,143
|
)
|
|
39.29
|
|
|
Outstanding as of December 28, 2019
|
3,222,725
|
|
|
$
|
39.24
|
|
|
Number of Shares
|
|
Weighted Average Grant-Date Fair Value
|
|||
Non-vested as of December 29, 2018
|
2,001,418
|
|
|
$
|
11.46
|
|
Granted
|
637,763
|
|
|
9.84
|
|
|
Vested
|
(920,133
|
)
|
|
12.47
|
|
|
Forfeited
|
(116,475
|
)
|
|
10.27
|
|
|
Non-vested as of December 28, 2019
|
1,602,573
|
|
|
$
|
10.32
|
|
|
December 28, 2019
|
|||||||||||
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Exercisable Period
(years)
|
|
Aggregate Intrinsic Value
($000s)
|
|||||
Expected to vest
|
1,484,810
|
|
|
$
|
38.95
|
|
|
8.0
|
|
$
|
1,597
|
|
Exercisable
|
1,620,152
|
|
|
$
|
39.46
|
|
|
5.1
|
|
$
|
3,901
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Total fair value of shares vested
|
$
|
11,470
|
|
|
$
|
7,204
|
|
|
$
|
8,057
|
|
Total intrinsic value of options exercised
|
$
|
5,981
|
|
|
$
|
8,917
|
|
|
$
|
7,270
|
|
Cash received from exercise of stock options
|
$
|
27,926
|
|
|
$
|
17,021
|
|
|
$
|
11,418
|
|
Tax benefit realized from exercise of stock options
|
$
|
1,353
|
|
|
$
|
1,928
|
|
|
$
|
2,423
|
|
Weighted-average grant-date fair value of options granted
|
$
|
9.84
|
|
|
$
|
9.72
|
|
|
$
|
14.41
|
|
|
Number of Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Outstanding as of December 31, 2016
|
60,500
|
|
|
$
|
38.54
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(18,500
|
)
|
|
35.36
|
|
|
Forfeited
|
(5,000
|
)
|
|
51.54
|
|
|
Outstanding as of December 30, 2017
|
37,000
|
|
|
$
|
38.38
|
|
Granted
|
23,224
|
|
|
40.44
|
|
|
Vested
|
(12,000
|
)
|
|
51.54
|
|
|
Forfeited
|
(2,500
|
)
|
|
28.90
|
|
|
Outstanding as of December 29, 2018
|
45,724
|
|
|
$
|
36.49
|
|
Granted
|
10,000
|
|
|
36.05
|
|
|
Vested
|
(24,823
|
)
|
|
33.30
|
|
|
Forfeited
|
(9,289
|
)
|
|
40.22
|
|
|
Outstanding as of December 28, 2019
|
21,612
|
|
|
$
|
38.41
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Value of shares vested
|
$
|
827
|
|
|
$
|
618
|
|
|
$
|
654
|
|
|
December 28, 2019
|
|
December 29, 2018
|
||||
Current maturities of other long-term obligations
|
$
|
850
|
|
|
$
|
2,356
|
|
Other long-term liabilities
|
9,740
|
|
|
8,729
|
|
||
Total deferred compensation
|
$
|
10,590
|
|
|
$
|
11,085
|
|
|
|
|
|
||||
Total fair-market value of deferred compensation
|
$
|
7,503
|
|
|
$
|
7,857
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Stock contribution
|
$
|
7,237
|
|
|
$
|
7,174
|
|
|
$
|
7,327
|
|
Cash contribution
|
21,171
|
|
|
21,413
|
|
|
23,834
|
|
|||
Total annual contribution
|
$
|
28,408
|
|
|
$
|
28,587
|
|
|
$
|
31,161
|
|
|
2019
|
|
|
2018
|
|
||
Change in benefit obligation
|
|
|
|
||||
Benefit obligation at beginning of year
|
$
|
19,552
|
|
|
$
|
22,933
|
|
Service cost
|
680
|
|
|
853
|
|
||
Interest cost
|
795
|
|
|
789
|
|
||
Benefits paid
|
(1,607
|
)
|
|
(1,570
|
)
|
||
Actuarial (gain) loss
|
2,398
|
|
|
(3,453
|
)
|
||
Benefit obligation at end of year
|
$
|
21,818
|
|
|
$
|
19,552
|
|
Change in plan assets
|
|
|
|
|
|
||
Fair value at beginning of year
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on assets
|
—
|
|
|
—
|
|
||
Employer contribution
|
1,607
|
|
|
1,570
|
|
||
Transferred out
|
—
|
|
|
—
|
|
||
Benefits paid
|
(1,607
|
)
|
|
(1,570
|
)
|
||
Fair value at end of year
|
$
|
—
|
|
|
$
|
—
|
|
Funded Status of Plan
|
$
|
(21,818
|
)
|
|
$
|
(19,552
|
)
|
|
|
|
|
||||
Amounts recognized in the Statement of Financial Position consist of:
|
|
|
|
|
|
||
Current liabilities
|
$
|
1,081
|
|
|
$
|
1,057
|
|
Non-current liabilities
|
$
|
20,737
|
|
|
$
|
18,495
|
|
|
|
|
|
||||
Amounts recognized in Accumulated Other Comprehensive Income (Loss) (before tax) consist of:
|
|
|
|
|
|
||
Actuarial (gain) loss
|
$
|
2,384
|
|
|
$
|
(14
|
)
|
|
|
|
|
|
|
||
Change in Accumulated Other Comprehensive Income (before tax):
|
|
|
|
|
|
||
Amount disclosed at beginning of year
|
$
|
(14
|
)
|
|
$
|
3,565
|
|
Actuarial (gain) loss
|
2,398
|
|
|
(3,453
|
)
|
||
Amortization of transition amount
|
—
|
|
|
(126
|
)
|
||
Amount disclosed at end of year
|
$
|
2,384
|
|
|
$
|
(14
|
)
|
Fiscal 2020
|
$
|
1,081
|
|
Fiscal 2021
|
$
|
1,069
|
|
Fiscal 2022
|
$
|
1,069
|
|
Fiscal 2023
|
$
|
1,083
|
|
Fiscal 2024
|
$
|
1,098
|
|
Fiscal 2025 – 2029
|
$
|
5,933
|
|
Fiscal 2020
|
$
|
1,081
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Discount rate
|
3.2
|
%
|
|
4.2
|
%
|
|
3.5
|
%
|
|
2020
|
|
|
Service cost
|
$
|
777
|
|
Interest cost
|
675
|
|
|
Amortization of net (gain) loss
|
20
|
|
|
Net periodic post-retirement benefit cost
|
$
|
1,472
|
|
Classification
|
December 28,
2019 |
||
Assets
|
|
||
Right-of-use operating leases
|
$
|
72,883
|
|
Right-of-use finance leases
|
2,129
|
|
|
Total Right-of-use operating / finance leases
|
$
|
75,012
|
|
|
|
||
Liabilities
|
|
||
Current lease obligations - operating
|
$
|
22,219
|
|
Current lease obligations - finance
|
563
|
|
|
Total Current lease obligations - operating / finance
|
22,782
|
|
|
|
|
||
Long-term lease obligations - operating
|
58,233
|
|
|
Long-term lease obligations - finance
|
1,581
|
|
|
Total Long-term lease obligations - operating / finance
|
59,814
|
|
|
|
|
||
Total lease obligations - operating / finance
|
$
|
82,596
|
|
|
Classification
|
2019
|
|
|
Operating lease costs
|
|
|
||
Fixed
|
Cost of sales
|
$
|
1,803
|
|
|
Selling and administrative expenses
|
24,149
|
|
|
Short-term / variable
|
Cost of sales
|
700
|
|
|
|
Selling and administrative expenses
|
1,140
|
|
|
Finance lease costs
|
|
|
||
Amortization
|
Cost of sales, selling and administrative, and interest expense
|
480
|
|
|
Less: Sublease income
|
|
181
|
|
|
Total lease costs
|
|
$
|
28,091
|
|
|
Operating Leases (a)
|
|
Finance Leases (b)
|
|
Total
|
||||||
2020
|
$
|
25,181
|
|
|
$
|
630
|
|
|
$
|
25,811
|
|
2021
|
18,597
|
|
|
602
|
|
|
19,199
|
|
|||
2022
|
13,054
|
|
|
516
|
|
|
13,570
|
|
|||
2023
|
10,006
|
|
|
436
|
|
|
10,442
|
|
|||
2024
|
5,745
|
|
|
112
|
|
|
5,857
|
|
|||
Thereafter
|
17,609
|
|
|
—
|
|
|
17,609
|
|
|||
Total lease payments
|
90,192
|
|
|
2,296
|
|
|
92,488
|
|
|||
Less: Interest
|
9,742
|
|
|
150
|
|
|
9,892
|
|
|||
Present value of lease liabilities
|
$
|
80,450
|
|
|
$
|
2,146
|
|
|
$
|
82,596
|
|
(a)
|
At this time there are no operating lease options to extend lease terms that are reasonably certain of being exercised. Currently the Corporation has $0.2 million of legally binding minimum lease payments for operating leases signed but not yet commenced, which are excluded from operating lease liabilities.
|
(b)
|
At this time there are no finance lease options to extend lease terms that are reasonably certain of being exercised. Currently the Corporation has $0.4 million of legally binding minimum lease payments for finance leases signed but not yet commenced, which are excluded from finance lease liabilities.
|
|
Weighted-Average Discount Rate (percent)
|
|
Weighted-Average Remaining Lease Term
(years)
|
|
Operating leases
|
4.1
|
%
|
|
5.4
|
Finance leases
|
3.6
|
%
|
|
4.0
|
|
2019
|
|
|
Cash paid for amounts included in the measurements of lease liabilities
|
|
||
Operating cash flows from operating / finance leases
|
$
|
26,446
|
|
Financing cash flows from finance leases
|
$
|
419
|
|
Leased assets obtained in exchange for new operating / finance lease liabilities
|
$
|
25,268
|
|
•
|
The Corporation has made an accounting election by class of underlying assets to not separate non-lease components of a contract from the lease components to which they relate for all classes of assets except for embedded leases.
|
•
|
The Corporation has elected not to restate prior period financial statements for the effects of the new standard. Required ASC 840 disclosures for periods prior to 2019 have been provided.
|
•
|
The Corporation has elected not to use hindsight in determining the lease term and in assessing the likelihood that a lessee purchase option will be exercised.
|
•
|
The Corporation has elected for all asset classes to not recognize ROU assets and lease liabilities for leases that at the acquisition date have a remaining lease term of twelve months or less.
|
|
|
Operating Leases
|
||
2019
|
|
$
|
24,387
|
|
2020
|
|
18,250
|
|
|
2021
|
|
13,324
|
|
|
2022
|
|
9,082
|
|
|
2023
|
|
6,228
|
|
|
Thereafter
|
|
10,469
|
|
|
Total minimum lease payments
|
|
$
|
81,740
|
|
|
2018
|
|
|
2017
|
|
||
Rent expense
|
$
|
31,027
|
|
|
$
|
32,158
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net Sales:
|
|
|
|
|
|
||||||
Office furniture
|
$
|
1,697,186
|
|
|
$
|
1,706,092
|
|
|
$
|
1,660,723
|
|
Hearth products
|
549,761
|
|
|
551,803
|
|
|
515,159
|
|
|||
Total
|
$
|
2,246,947
|
|
|
$
|
2,257,895
|
|
|
$
|
2,175,882
|
|
|
|
|
|
|
|
||||||
Income Before Income Taxes:
|
|
|
|
|
|
|
|
|
|||
Office furniture (a)
|
$
|
103,894
|
|
|
$
|
75,965
|
|
|
$
|
50,176
|
|
Hearth products (b)
|
94,329
|
|
|
91,367
|
|
|
83,649
|
|
|||
General corporate
|
(46,881
|
)
|
|
(39,159
|
)
|
|
(57,135
|
)
|
|||
Operating income
|
151,342
|
|
|
128,173
|
|
|
76,690
|
|
|||
Interest expense, net
|
8,628
|
|
|
9,448
|
|
|
6,078
|
|
|||
Total
|
$
|
142,714
|
|
|
$
|
118,725
|
|
|
$
|
70,612
|
|
|
|
|
|
|
|
||||||
Depreciation and Amortization Expense:
|
|
|
|
|
|
|
|
|
|||
Office furniture
|
$
|
44,887
|
|
|
$
|
44,303
|
|
|
$
|
48,435
|
|
Hearth products
|
8,884
|
|
|
8,171
|
|
|
10,109
|
|
|||
General corporate
|
23,656
|
|
|
22,314
|
|
|
14,328
|
|
|||
Total
|
$
|
77,427
|
|
|
$
|
74,788
|
|
|
$
|
72,872
|
|
|
|
|
|
|
|
||||||
Capital Expenditures (including capitalized software):
|
|
|
|
|
|
|
|
|
|||
Office furniture
|
$
|
41,137
|
|
|
$
|
47,860
|
|
|
$
|
79,458
|
|
Hearth products
|
12,225
|
|
|
8,854
|
|
|
17,356
|
|
|||
General corporate
|
13,523
|
|
|
6,982
|
|
|
30,577
|
|
|||
Total
|
$
|
66,885
|
|
|
$
|
63,696
|
|
|
$
|
127,391
|
|
|
|
|
|
|
|
||||||
Identifiable Assets:
|
|
|
|
|
|
|
|
|
|||
Office furniture
|
$
|
874,913
|
|
|
$
|
797,574
|
|
|
$
|
821,767
|
|
Hearth products
|
364,653
|
|
|
352,060
|
|
|
347,189
|
|
|||
General corporate
|
212,946
|
|
|
252,210
|
|
|
222,594
|
|
|||
Total
|
$
|
1,452,512
|
|
|
$
|
1,401,844
|
|
|
$
|
1,391,550
|
|
(a)
|
Included in operating profit for the office furniture segment are pretax charges of $2.4 million, $16.4 million, and $32.5 million, for restructuring and impairment charges in 2019, 2018, and 2017, respectively.
|
(b)
|
Included in operating profit for the hearth products segment are pretax charges of $1.2 million and $4.9 million for closing facilities in 2018 and 2017.
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Systems and storage
|
$
|
951,965
|
|
|
$
|
1,015,900
|
|
|
$
|
1,069,518
|
|
Seating
|
583,245
|
|
|
598,722
|
|
|
536,501
|
|
|||
Other
|
161,976
|
|
|
91,470
|
|
|
54,704
|
|
|||
Hearth products
|
549,761
|
|
|
551,803
|
|
|
515,159
|
|
|||
|
$
|
2,246,947
|
|
|
$
|
2,257,895
|
|
|
$
|
2,175,882
|
|
|
2019
|
||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Net sales
|
$
|
479,456
|
|
|
$
|
526,026
|
|
|
$
|
625,386
|
|
|
$
|
616,079
|
|
Cost of sales
|
309,842
|
|
|
333,437
|
|
|
387,715
|
|
|
382,192
|
|
||||
Gross profit
|
169,614
|
|
|
192,589
|
|
|
237,671
|
|
|
233,887
|
|
||||
Selling and administrative expenses
|
165,937
|
|
|
168,411
|
|
|
176,731
|
|
|
168,969
|
|
||||
Restructuring and impairment charges
|
—
|
|
|
930
|
|
|
284
|
|
|
1,157
|
|
||||
Operating income
|
3,677
|
|
|
23,248
|
|
|
60,656
|
|
|
63,761
|
|
||||
Interest expense, net
|
2,111
|
|
|
2,480
|
|
|
2,205
|
|
|
1,833
|
|
||||
Income before income taxes
|
1,566
|
|
|
20,768
|
|
|
58,451
|
|
|
61,928
|
|
||||
Income tax expense
|
546
|
|
|
4,957
|
|
|
12,375
|
|
|
14,333
|
|
||||
Net income
|
1,020
|
|
|
15,811
|
|
|
46,076
|
|
|
47,595
|
|
||||
Less: Net income (loss) attributable to non-controlling interest
|
(2
|
)
|
|
1
|
|
|
(2
|
)
|
|
0
|
|
||||
Net income attributable to HNI Corporation
|
$
|
1,022
|
|
|
$
|
15,810
|
|
|
$
|
46,078
|
|
|
$
|
47,595
|
|
|
|
|
|
|
|
|
|
||||||||
Average number of common shares outstanding - basic
|
43,534
|
|
|
43,218
|
|
|
42,899
|
|
|
42,755
|
|
||||
Net income attributable to HNI Corporation per common share – basic
|
$
|
0.02
|
|
|
$
|
0.37
|
|
|
$
|
1.07
|
|
|
$
|
1.11
|
|
Average number of common shares outstanding - diluted
|
44,089
|
|
|
43,634
|
|
|
43,186
|
|
|
43,137
|
|
||||
Net income attributable to HNI Corporation per common share – diluted
|
$
|
0.02
|
|
|
$
|
0.36
|
|
|
$
|
1.07
|
|
|
$
|
1.10
|
|
|
|
|
|
|
|
|
|
||||||||
As a Percentage of Net Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
Gross profit
|
35.4
|
|
|
36.6
|
|
|
38.0
|
|
|
38.0
|
|
||||
Selling and administrative expenses
|
34.6
|
|
|
32.0
|
|
|
28.3
|
|
|
27.4
|
|
||||
Restructuring and impairment charges
|
—
|
|
|
0.2
|
|
|
0.0
|
|
|
0.2
|
|
||||
Operating income
|
0.8
|
|
|
4.4
|
|
|
9.7
|
|
|
10.3
|
|
||||
Income tax expense
|
0.1
|
|
|
0.9
|
|
|
2.0
|
|
|
2.3
|
|
||||
Net income attributable to HNI Corporation
|
0.2
|
|
|
3.0
|
|
|
7.4
|
|
|
7.7
|
|
|
2018
|
||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Net sales
|
$
|
505,069
|
|
|
$
|
543,614
|
|
|
$
|
611,120
|
|
|
$
|
598,092
|
|
Cost of sales
|
328,150
|
|
|
342,744
|
|
|
377,789
|
|
|
374,174
|
|
||||
Gross profit
|
176,919
|
|
|
200,870
|
|
|
233,331
|
|
|
223,918
|
|
||||
Selling and administrative expenses
|
171,895
|
|
|
172,973
|
|
|
179,577
|
|
|
166,695
|
|
||||
Restructuring and impairment charges
|
1,338
|
|
|
837
|
|
|
128
|
|
|
13,422
|
|
||||
Operating income
|
3,686
|
|
|
27,060
|
|
|
53,626
|
|
|
43,801
|
|
||||
Interest expense, net
|
2,224
|
|
|
2,629
|
|
|
2,522
|
|
|
2,073
|
|
||||
Income before income taxes
|
1,462
|
|
|
24,431
|
|
|
51,104
|
|
|
41,728
|
|
||||
Income tax expense (benefit)
|
(999
|
)
|
|
5,835
|
|
|
11,197
|
|
|
9,366
|
|
||||
Net income
|
2,461
|
|
|
18,596
|
|
|
39,907
|
|
|
32,362
|
|
||||
Less: Net loss attributable to non-controlling interest
|
(49
|
)
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Net income attributable to HNI Corporation
|
$
|
2,510
|
|
|
$
|
18,597
|
|
|
$
|
39,907
|
|
|
$
|
32,363
|
|
|
|
|
|
|
|
|
|
||||||||
Average number of common shares outstanding - basic
|
43,360
|
|
|
43,665
|
|
|
43,823
|
|
|
43,708
|
|
||||
Net income attributable to HNI Corporation per common share – basic
|
$
|
0.06
|
|
|
$
|
0.43
|
|
|
$
|
0.91
|
|
|
$
|
0.74
|
|
Average number of common shares outstanding - diluted
|
44,134
|
|
|
44,290
|
|
|
44,679
|
|
|
44,311
|
|
||||
Net income attributable to HNI Corporation per common share – diluted
|
$
|
0.06
|
|
|
$
|
0.42
|
|
|
$
|
0.89
|
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
|
||||||||
As a Percentage of Net Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
Gross profit
|
35.0
|
|
|
37.0
|
|
|
38.2
|
|
|
37.4
|
|
||||
Selling and administrative expenses
|
34.0
|
|
|
31.8
|
|
|
29.4
|
|
|
27.9
|
|
||||
Restructuring and impairment charges
|
0.3
|
|
|
0.2
|
|
|
0.0
|
|
|
2.2
|
|
||||
Operating income
|
0.7
|
|
|
5.0
|
|
|
8.8
|
|
|
7.3
|
|
||||
Income tax expense (benefit)
|
(0.2
|
)
|
|
1.1
|
|
|
1.8
|
|
|
1.6
|
|
||||
Net income attributable to HNI Corporation
|
0.5
|
|
|
3.4
|
|
|
6.5
|
|
|
5.4
|
|
•
|
an acquisition of the Corporation by means of a tender or exchange offer;
|
•
|
an acquisition of the Corporation by means of a proxy contest or otherwise; or
|
•
|
the removal of a majority or all of the Corporation’s incumbent officers and directors.
|
1.
|
Number of Restricted Stock Units Granted: __________
|
2.
|
Grant Date: __________
|
3.
|
Vesting of Restricted Stock Units: Subject to the terms of Section 7 and 8 below, 1/3 of the total number of Restricted Stock Units granted above, rounded up or down to the nearest whole share, will vest on each of the first, second, and third anniversaries of the Grant Date (each such date, a “Vesting Date”), provided that you remain continuously employed by the Corporation through such Vesting Date.
|
4.
|
Impact of Vesting of Restricted Stock Units: On each Vesting Date, you will be issued a number of Shares equal to the number of Restricted Stock Units that become vested on that Vesting Date. A portion of these Shares will be withheld to pay applicable withholding taxes due on such Vesting Date. To the extent that payroll taxes are required to be withheld prior to a Vesting Date, the Corporation may withhold such taxes from your cash compensation payable by the Corporation in accordance with Section 3121(v) of the Code.
|
5.
|
Stockholder Rights: Prior to the time that your Restricted Stock Units vest and the Corporation has issued Shares relating to such Restricted Stock Units, you will not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Shares deliverable with respect to such Restricted Stock Units. However, as of each date on which a cash dividend is paid to holders of Shares, a Divided Equivalent in an amount equal to the cash dividend that is paid on each Share, multiplied by the number of Restricted Stock Units that remain unvested and outstanding or otherwise have not been settled as of the dividend payment date (the “Dividend Equivalent Amount”) shall be credited to an unfunded account for your benefit. The aggregate Dividend Equivalent Amount, if any, credited to such account shall vest and be paid in cash at the same time and subject to the same vesting conditions as the corresponding Restricted Stock Units to which the Dividend Equivalent Amount relates. From and after the date Shares are actually issued or delivered upon settlement of the Restricted Stock Units, you then will have dividend rights with respect to those Shares.
|
6.
|
Non-Transferability of Restricted Stock Units:
|
(a)
|
No assignment or transfer of Restricted Stock Units, whether voluntary or involuntary, by operation of law or otherwise, can be made except by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Corporation.
|
(b)
|
Notwithstanding the preceding paragraph, you may transfer your Restricted Stock Units to one or more family members (as such term is used in the Plan) or to one or more trusts established solely for the benefit of one or more family members or to one or more partnerships in which the only partners are family members; provided, however, that (i) no such transfer shall be effective unless you deliver reasonable prior notice thereof to the Corporation and such transfer is thereafter effected subject to the specific authorization of, and in accordance with any terms and conditions that shall have been made applicable thereto by, the Committee or the Board, (ii) any such transferee shall be subject to the same terms and conditions hereunder as you are and (iii) such transfer cannot be made for value.
|
7.
|
Termination of Employment:
|
(a)
|
Death or Disability: If your employment terminates due to your death or you become Disabled, as defined below, your outstanding Restricted Stock Units which are outstanding as of the date of your death or Disability shall become immediately 100% vested, provided that you are employed by the Corporation on the date of your death or Disability. The Shares subject to the Restricted Stock Units that become vested pursuant to this Section 7(a) shall be issued to you or your beneficiary or estate within 60 days after the date of your death or Disability. For purposes of this Award Agreement, and notwithstanding the terms of the Plan, you will be considered “Disabled” or to have a “Disability” if you are, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Corporation.
|
(b)
|
By Retirement: If your employment terminates after your Retirement Eligible Date for a reason other than Cause, as defined below, your outstanding Restricted Stock Units shall continue to vest in accordance with Section 3 as though your employment had continued through each remaining vesting date. The Shares subject to the Restricted Stock Units that become vested pursuant to this Section 7(b) shall be issued to you within 60 days after the applicable vesting date.
|
(c)
|
For Other Reasons: Restricted Stock Units which are not vested as of the date of employment termination for reasons other than those specified in Section 7(a) or 7(b) and which have not become vested pursuant to Section 8 shall immediately terminate and shall be forfeited to the Corporation.
|
(d)
|
Definition of Cause: For purposes of this Award Agreement, “Cause” shall have the meaning described in your employment or severance agreement with the Corporation, or if no such agreements exists, then it shall mean your:
|
8.
|
Change in Control: In the event of a Change in Control, all outstanding Restricted Stock Units shall become fully vested and Section 10.1 of the Plan will apply. The Shares subject to the Restricted Stock Units that become vested pursuant to this Section 8 shall be issued to you within 30 days after the date of the Change in Control; provided that if the Change in Control does not constitute a “change in control event,” within the meaning of Section 409A of the Code, then the Restricted Stock Units shall become fully vested as of the date of the Change in Control, but the Shares subject to such Restricted Stock Units shall not be issued to you until the dates on which the Restricted Stock Units otherwise would have become vested and issuable pursuant to Section 3 of this Award Agreement.
|
9.
|
Section 409A. The Restricted Stock Units are intended to be exempt from or comply with Section 409A of the Code, and this Award Agreement shall be interpreted and construed accordingly.
|
1.
|
Number of Performance Share Units Granted: __________
|
2.
|
Grant Date: __________
|
3.
|
Vesting of Performance Share Units: Subject to the terms of Section 7 and 8 below, the Performance Share Units shall vest on __________ (the “Vesting Date”), provided that (i) you remain continuously employed by the Corporation through such Vesting Date and (ii) the Performance Measures determined by the Committee and set forth on Exhibit A for the period between __________ and the Vesting Date (the “Performance Period”) have been met as of such Vesting Date.
|
4.
|
Impact of Vesting of Performance Share Units: Within 2½ months after the Vesting Date, or such earlier date on which the Performance Share Units vest pursuant to Section 8 below, the Company shall issue or deliver to you, subject to the achievement or deemed achievement of the Performance Measures set forth on Exhibit A and the other conditions of this Award Agreement, unrestricted Shares equal to the number of Performance Share Units that become vested, rounded up or down to the nearest whole number. A portion of these Shares will be withheld to pay applicable withholding taxes.
|
5.
|
Stockholder Rights: Prior to the time that your Performance Share Units vest and the Corporation has issued Shares relating to such Performance Share Units, you will not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Shares deliverable with respect to such Performance Share Units. However, as of each date on which a cash dividend is paid to holders of Shares, a Divided Equivalent in an amount equal to the cash dividend that is paid on each Share, multiplied by the number of Performance Share Units that remain unvested and outstanding or otherwise have not been settled as of the dividend payment date (the “Dividend Equivalent Amount”) shall be credited to an unfunded account for your benefit. The aggregate Dividend Equivalent Amount, if any, credited to such account shall vest and be paid in cash at the same time and subject to the same vesting and performance conditions as the corresponding Performance Share Units to which the Dividend Equivalent Amount relates. From and after the date Shares are actually issued or delivered upon settlement of the Performance Share Units, you then will have dividend rights with respect to those Shares.
|
6.
|
Non-Transferability of Performance Share Units:
|
(a)
|
No assignment or transfer of Performance Share Units, whether voluntary or involuntary, by operation of law or otherwise, can be made except by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Corporation.
|
(b)
|
Notwithstanding the preceding paragraph, you may transfer your Performance Share Units to one or more family members (as such term is used in the Plan) or to one or more trusts established solely for the benefit of one or more family members or to one or more partnerships in which the only partners are family members; provided, however, that (i) no such transfer shall be effective unless you deliver reasonable prior notice thereof to the Corporation and such transfer is thereafter effected subject to the specific authorization of, and in accordance with any terms and conditions that shall have been made applicable thereto by, the Committee or the Board, (ii) any such transferee shall be subject to the same terms and conditions hereunder as you are and (iii) such transfer cannot be made for value.
|
7.
|
Termination of Employment:
|
(a)
|
By Death or Disability: If your employment terminates due to your death or Disability, a prorated number of your outstanding Performance Share Units shall become vested at the end of the Performance Period, which prorated number shall be determined by multiplying the number of Performance Share Units that are earned at the end of the Performance Period, based on the extent to which the Performance Measures set forth on Exhibit A are achieved, by a fraction, the numerator of which is the number of months in the Performance Period that occurred prior to such termination of employment, and the denominator of which is the total number of months in the Performance Period. For this purpose, you will be credited with a month of employment during the Performance Period only if you are employed for at least 15 days during such month. Any Performance Share Units that do not become vested pursuant to this Section 7(a) shall be forfeited. The Performance Share Units that become vested pursuant to this Section 7(a) shall be issued to you or your beneficiary or estate within 2½ months after the last day of the Performance Period.
|
(b)
|
By Retirement: If your employment terminates after your Retirement Eligible Date for a reason other than Cause, as defined below, a prorated number of your outstanding Performance Share Units shall become vested as of the end of the Performance Period. The prorated number shall be determined by multiplying the number of Performance Share Units that are earned at the end of the Performance Period, based on the extent to which the Performance Measures set forth on Exhibit A are achieved, by a fraction, the numerator of which is the number of months in the Performance Period that occurred prior to such termination of employment, and the denominator of which is the total number of months in the Performance Period. For this purpose, you will be credited with a month of employment during the Performance Period only if you are employed for at least 15 days during such month. Any Performance Share Units that do not become vested pursuant to this Section 7(b) shall be forfeited. The Performance Share Units that become vested pursuant to this Section 7(b) shall be issued to you within 2½ months after the last day of the Performance Period.
|
(c)
|
For Other Reasons: Performance Share Units which are not vested as of the date of employment termination for reasons other than those specified in Section 7(a) or 7(b) and which have not become vested pursuant to Section 8 shall immediately terminate and shall be forfeited to the Corporation.
|
(d)
|
Definition of Cause: For purposes of this Award Agreement, “Cause” shall have the meaning described in your employment or severance agreement with the Corporation, or if no such agreements exists, then it shall mean your: (i) repeated failure to perform a substantial part of your duties and responsibilities; (ii) willful misconduct, illegal act, fraud or dishonesty; (iii) material violation of the rules of conduct of the Corporation or (iv) violation of your duty of confidentiality and loyalty to the Corporation, which in each case shall be determined by the Corporation in its sole and absolute discretion.
|
8.
|
Change in Control: In the event of a Change in Control, the achievement of the Performance Measures shall be determined, and the Performance Share Units shall vest in accordance with the terms of the Plan.
|
9.
|
Section 409A. The Performance Share Units are intended to be exempt from Section 409A of the Code, and this Award Agreement shall be interpreted and construed accordingly.
|
Subsidiary
|
Country/State
of Incorporation
|
Doing Business As
|
|
|
|
Allsteel Inc.
|
Illinois
|
Allsteel Inc.; HNI Global; HNI One; HNI One - Global Accounts; One from HNI; HNI Canada
|
|
|
|
Contract Resource Group LLC
|
Delaware
|
Contract Resource Group LLC
|
|
|
|
Dongguan Lamex Furniture Co. Ltd.
|
PRC
|
Dongguan Lamex Furniture Co. Ltd.
|
|
|
|
Global Known Ltd.
|
Hong Kong
|
Global Known Ltd.
|
|
|
|
The Gunlocke Company L.L.C.
|
Iowa
|
The Gunlocke Company L.L.C.
|
|
|
|
HBF Asia Pacific Limited
|
Hong Kong
|
HBF Asia Pacific Limited
|
|
|
|
Hearth & Home Technologies LLC
|
Iowa
|
Hearth & Home Technologies; Stellar Hearth; Fireside Hearth & Home
|
|
|
|
HFM Partners
|
Iowa
|
HFM Partners
|
|
|
|
Hickory Business Furniture, LLC
|
North Carolina
|
Hickory Business Furniture, LLC;
HBF Furniture LLC
|
|
|
|
HNI Asia L.L.C.
|
Iowa
|
HNI Asia L.L.C.
|
|
|
|
HNI Asia Technology Services (Shenzhen) Limited
|
PRC
|
HNI Asia Technology Services (Shenzhen) Limited
|
|
|
|
HNI Holdings Inc.
|
Iowa
|
HNI Holdings Inc.
|
|
|
|
HNI Hong Kong Limited
|
Hong Kong
|
HNI Hong Kong Limited
|
|
|
|
HNI International Inc.
|
Iowa
|
HNI International Inc.
|
|
|
|
HNI International (Mexico) L.L.C.
|
Iowa
|
HNI International (Mexico) L.L.C.
|
|
|
|
HNI International (Puerto Rico) L.L.C.
|
Iowa
|
HNI International (Puerto Rico) L.L.C.
|
|
|
|
HNI Middle East DMCC
|
Dubai
|
HNI Middle East DMCC
|
|
|
|
HNI Office India Ltd.
|
India
|
HNI India
|
|
|
|
HNI Services LLC
|
Iowa
|
HNI Services LLC
|
|
|
|
HNI Singapore Private Limited
|
Singapore
|
HNI Singapore Private Limited
|
|
|
|
HNI Technologies Inc.
|
Iowa
|
HNI Technologies Inc.
|
|
|
|
The HON Company LLC
|
Iowa
|
The HON Company LLC; Lewis Office LLC;
Lewis Office; The HON Company LLC - ATHC
|
|
|
|
HON INDUSTRIES (Canada) Inc.
|
Canada
|
HON INDUSTRIES (Canada) Inc.
|
|
|
|
HON Internacional de Mexico S.de R.L.de C.V.
|
Mexico
|
HON Internacional de Mexico S.de R.L.de C.V.
|
|
|
|
HON Internacional Servicios de Mexico,
S.de R.L. de C.V.
|
Mexico
|
HON Internacional Servicios de Mexico,
S.de R.L. de C.V.
|
|
|
|
Lamex China Investment Ltd.
|
Hong Kong
|
Lamex China Investment Ltd.
|
|
|
|
Lamex Trading Co. Ltd.
|
Hong Kong
|
Lamex Trading Co. Ltd.
|
|
|
|
Maxon Furniture Inc.
|
Iowa
|
Maxon Furniture Inc.
|
|
|
|
Monessen Hearth Canada, Inc.
|
Canada
|
Monessen Hearth Canada, Inc.
|
|
|
|
Monessen Hearth Systems Company, LLC
|
Kentucky
|
Monessen Hearth Systems Company, LLC;
Vermont Castings Group
|
|
|
|
OFM, LLC
|
Delaware
|
OFM, LLC; Essentials by OFM
|
|
|
|
Paoli LLC
|
Iowa
|
Paoli LLC; Paoli Furniture LLC; Paoli LLC of Iowa
|
|
|
|
Pearl City Insurance Company
|
Arizona
|
Pearl City Insurance Company
|
Date: February 25, 2020
|
By:
|
/s/ Jeffrey D. Lorenger
|
|
|
Name: Jeffrey D. Lorenger
|
|
|
Title: Chairman, President, and Chief Executive Officer
|
Date: February 25, 2020
|
By:
|
/s/ Marshall H. Bridges
|
|
|
Name: Marshall H. Bridges
|
|
|
Title: Senior Vice President and Chief Financial Officer
|
Date: February 25, 2020
|
By:
|
/s/ Jeffrey D. Lorenger
|
|
|
Name: Jeffrey D. Lorenger
|
|
|
Title: Chairman, President, and Chief Executive Officer
|
Date: February 25, 2020
|
By:
|
/s/ Marshall H. Bridges
|
|
|
Name: Marshall H. Bridges
|
|
|
Title: Senior Vice President and Chief Financial Officer
|