HNI CORP (Form: 10-K, Received: 02/26/2010 08:28:49)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 2, 2010

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-14225

HNI Corporation

An Iowa Corporation

408 East Second Street

IRS Employer No. 42-0617510

P. O. Box 1109

Muscatine, IA 52761-0071

563/272-7400

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, with par value of $1.00 per share.		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer	T	Accelerated filer	o

Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No T

The aggregate market value of the voting stock held by nonaffiliates of the Registrant, as of

July 4, 2009 was $559,283,601, based on the New York Stock Exchange closing price for such shares on that date, assuming for purposes of this calculation that all 5% holders and all directors and executive officers of the Registrant are affiliates.

The number of shares outstanding of the Registrant's common stock, as of February 5, 2010 was 45,093,508.

Documents Incorporated by Reference

Portions of the Registrant's Proxy Statement dated March 26, 2010, for the May 11, 2010, Annual Meeting of Shareholders are incorporated by reference into Part III.

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ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

PART I

		Page
Item 1.	Business	5

Item 1A.	Risk Factors	13

Item 1B.	Unresolved Staff Comments	21

Item 2.	Properties	21

Item 3.	Legal Proceedings	23

Item 4.	Submission of Matters to a Vote of Security Holders	23

	Table I – Executive Officers of the Registrant	24



PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25

Item 6.	Selected Financial Data	26

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 8.	Financial Statements and Supplementary Data	40

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	40

Item 9A.	Controls and Procedures	40

Item 9B.	Other Information	40



PART III

Item 10.	Directors, Executive Officers and Corporate Governance	41

Item 11.	Executive Compensation	41

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	41

Item 13.	Certain Relationships and Related Transactions, and Director Independence	41

Item 14.	Principal Accountant Fees and Services	41

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PART IV

Item 15.	Exhibits, Financial Statement Schedules	42

Signatures		44

Management Report on Internal Control Over Financial Reporting		46

Report of Independent Registered Public Accounting Firm		47

Financial Statements		48

Financial Statement Schedules		82

Index of Exhibits		83

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ANNUAL REPORT ON FORM 10-K

PART I

ITEM 1. BUSINESS

General

HNI Corporation (the “Corporation”, “we”, “us” or “our”) is an Iowa corporation incorporated in 1944. The Corporation is a provider of office furniture and hearth products. A broad office furniture product offering is sold to dealers, wholesalers, retail superstores, end-user customers, and federal, state and local governments. Dealers and wholesalers are the major channels based on sales. Hearth products include a full array of gas, electric, wood and biomass burning fireplaces, inserts, stoves, facings and accessories. These products are sold through a national system of dealers and distributors, as well as Corporation-owned distribution and retail outlets. In fiscal 2009, the Corporation had net sales of $1.7 billion, of which approximately $1.4 billion or 83% was attributable to office furniture products and $0.3 billion or 17% was attributable to hearth products. Please refer to Operating Segment Information in the Notes to Consolidated Financial Statements for further information about operating segments.

The Corporation is organized into a corporate headquarters and operating units with offices, manufacturing plants, distribution centers and sales showrooms in the United States, Canada, China, Hong Kong and Taiwan. See Item 2. Properties later in this report for additional related discussion.

Eight operating units, marketing under various brand names, participate in the office furniture industry. These operating units include: The HON Company, Allsteel Inc., Maxon Furniture Inc., The Gunlocke Company L.L.C., Paoli Inc., Hickory Business Furniture, LLC (“HBF”), HNI Hong Kong Limited (“Lamex”) and Omni Workspace Company. Each of these operating units provides products which are sold through various channels of distribution and segments of the industry.

The operating unit Hearth & Home Technologies Inc. (“Hearth & Home”) participates in the hearth products industry. The retail and distribution brand for this operating unit is Fireside Hearth & Home.

HNI International Inc. (“HNI International”) sells office furniture products manufactured by the Corporation’s operating units in select markets outside the United States and Canada. With dealers and servicing partners located in more than fifty countries, HNI International provides project management services virtually anywhere in the world.

Since its inception, the Corporation has been committed to systematically eliminating waste and in 1992 introduced its process improvement approach known as Rapid Continuous Improvement (“RCI”), which focuses on streamlining design, manufacturing and administrative processes. The Corporation's RCI program, in which most members participate, has contributed to increased productivity, lower costs, improved product quality and workplace safety. In addition, the Corporation's RCI efforts enable it to offer short average lead times, from receipt of order to delivery and installation, for most of its products.

The Corporation distributes its products through an extensive network of independent office furniture dealers, office products dealers, wholesalers and retailers. The Corporation is a supplier of office furniture to the largest nationwide distributors of office products.

The Corporation's product development efforts are focused on developing and providing solutions that are relevant and differentiated, and deliver quality, aesthetics and style.

An important element of the Corporation's success has been its member-owner culture, which has enabled it to attract, develop, retain and motivate skilled, experienced and efficient members (i.e., employees). Each of the Corporation's eligible members own stock in the Corporation through a number of stock-based plans, including a member stock purchase plan and a profit-sharing retirement plan, which drives a unique level of commitment to the Corporation’s success throughout the entire workforce.

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For further financial-related information with respect to acquisitions, restructuring and the Corporation’s operations in general, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” later in this report, and the following sections in the Notes to Consolidated Financial Statements: Nature of Operations, Business Combinations and Operating Segment Information.

Industry

According to the Business and Institutional Furniture Manufacturer's Association (“BIFMA”), U.S. office furniture industry shipments were estimated to be $7.8 billion in 2009, a decrease of 30% compared to 2008, which was a 2% decrease from 2007 levels. The Corporation believes the decrease in 2009 was due to weakness in the overall economy, declining white collar employment and corporate profitability and lack of small business confidence.

The U.S. office furniture market consists of two primary channels—the project or contract channel and the supplies-driven channel. The project channel has traditionally been characterized by sales of office furniture and services to large corporations, primarily for new office facilities, relocations or department or office redesigns, which are frequently customized to meet specific client and designer preferences. Project furniture is generally purchased through office furniture dealers who typically prepare a custom-designed office layout emphasizing image and design. The selling process is often complex and lengthy and generally has several manufacturers competing for the same projects.

The supplies-driven channel of the market, in which the Corporation is a leader, primarily represents smaller orders of office furniture purchased by businesses and home office users on the basis of price, quality, selection and speed and reliability of delivery. Office products dealers, wholesalers and retailers, such as office products superstores, are the primary distribution channels in this market channel. Office furniture and products dealers publish periodic catalogs that display office furniture and products from various manufacturers.

The Corporation also competes in the domestic hearth products industry, where it is a market leader. Hearth products are typically purchased by builders during the construction of new homes and homeowners during the renovation of existing homes. Both types of purchases involve seasonality with remodel/retrofit activity being concentrated in the September to December time-frame. Distribution is primarily through independent dealers, who may buy direct from the manufacturer or from an intermediate distributor. The Corporation sells approximately 45% of its hearth products to the new construction/builder channel.

Growth Strategy

The Corporation's strategy is to build on its position as a leading manufacturer of office furniture and hearth products in North America and pursue select global markets where opportunities exist to create value. The components of this growth strategy are to introduce new products, build brand equity, provide outstanding customer satisfaction by focusing on the end-user, strengthen the distribution network, respond to global competition, pursue complementary strategic acquisitions, enter markets not currently served and continually reduce costs.

The Corporation’s strategy has a dual focus: working continuously to extract new growth from its core markets while identifying and developing new, adjacent potential areas of growth. The Corporation focuses on extracting new growth from each of its existing businesses by deepening its understanding of end-users, using new insights gained to refine branding, selling and marketing and developing new products to serve them better. The Corporation also pursues opportunities in potential growth drivers outside of, but related to, its core business, such as vertical markets or new distribution models.

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Employees/Members

As of January 2, 2010, the Corporation employed approximately 8,700 persons, 8,600 of whom were full-time and 100 of whom were temporary personnel. The Corporation employed approximately 100 persons who were members of unions. The Corporation believes its labor relations are good.

Products and Solutions

Office Furniture

The Corporation designs, manufactures and markets a broad range of office furniture in four basic categories: (i) storage, including vertical files, lateral files and pedestals; (ii) seating, including task chairs, executive desk chairs, conference/training chairs and side chairs; (iii) office systems (typically modular and moveable workspaces with integrated work surfaces, space dividers and lighting); and (iv) desks and related products, including tables, bookcases and credenzas. In order to meet the demands of various markets, the Corporation's products are sold under the Corporation's brands – HON ® , Allsteel ® , Maxon ® , Gunlocke ® , Paoli ® , Whitehall ® , HBF ® , basyx TM and Lamex ® , as well as private labels.

The following is a description of the Corporation's major product categories and product lines:

Storage

The Corporation offers a variety of storage options designed either to be integrated into the Corporation's office systems products or to function as freestanding furniture in office applications. The Corporation sells most of its freestanding storage through independent office products and office furniture dealers, nationwide chains of office products dealers, wholesalers, office products superstores and mail order distributors.

Seating

The Corporation's seating line includes chairs designed for all types of office work. The chairs are available in a variety of frame colors, coverings and a wide range of price points. Key customer criteria in seating includes superior design, ergonomics, aesthetics, comfort and quality.

Office Panel Systems

The Corporation offers a complete line of office panel system products in order to meet the needs of a wide spectrum of organizations. Office panel systems may be used for team work settings, private offices and open floor plans. They are typically modular and movable workspaces composed of adjustable partitions, work surfaces, desk extensions, storage cabinets and electrical lighting systems which can be moved, reconfigured and reused within the office. Office panel systems offer a cost-effective and flexible alternative to traditional drywall office construction. A typical installation of office panels often includes related sales of seating, storage and accessories.

The Corporation offers whole office solutions, movable panels, storage units and work surfaces that can be installed easily and reconfigured to accommodate growth and change in organizations. The Corporation also offers consultative selling and design services for its office system products.

Desks and Related Products

The Corporation's offering of desks and related products includes stand-alone steel, laminate and wood furniture items, such as desks, bookshelves, credenzas and mobile desking. These products are available in a range of designs and price points. The Corporation's desks and related products are sold to a wide variety of customers from those designing large office configurations to small retail and home office purchasers. The Corporation offers a variety of tables designed for use in conference rooms, private offices, training areas, team work settings and open floor plans.

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Hearth Products

The Corporation is North America’s largest manufacturer and marketer of prefabricated fireplaces and related products, primarily for the home, which it sells under its widely recognized Heatilator ® , Heat & Glo ® , Quadra-Fire ® and Harman Stove TM brand names.

The Corporation’s line of hearth products includes a full array of gas, electric and wood burning fireplaces, inserts, stoves, facings and accessories. Heatilator ® and Heat & Glo ® are brand leaders in the two largest segments of the home fireplace market: vented-gas and wood fireplaces. The Corporation is the leader in “direct vent” fireplaces, which replace the chimney-venting system used in traditional fireplaces with a less expensive vent through the roof or an outer wall. In addition, the Corporation is the leader in pellet-burning stoves and furnaces with its Quadra-Fire and Harman product lines which provide home heating solutions using renewable fuel, an environmentally friendly trend that has come to the fore front in home heating and continues to grow. See “Intellectual Property” under this Item 1. Business for additional details.

Manufacturing

The Corporation manufactures office furniture in Alabama, Georgia, Indiana, Iowa, Kentucky, New York, North Carolina and China. The Corporation manufactures hearth products in Iowa, Maryland, Minnesota, Washington, California and Pennsylvania.

The Corporation purchases raw materials and components from a variety of suppliers, and generally most items are available from multiple sources. Major raw materials and components include coil steel, aluminum, zinc, castings, lumber, veneer, particleboard, fabric, paint, lacquer, hardware, plastic products and shipping cartons.

Since its inception, the Corporation has focused on making its manufacturing facilities and processes more flexible while at the same time reducing cost, eliminating waste and improving product quality. In 1992, the Corporation adopted the principles of RCI, which focus on developing flexible and efficient design, manufacturing and administrative processes that remove excess cost. The Corporation’s lean manufacturing philosophy leverages the creativity of its members to eliminate and reduce costs. To achieve flexibility and attain efficiency goals, the Corporation has adopted a variety of production techniques, including cellular manufacturing, focused factories, just-in-time inventory management, value engineering, business simplification and 80/20 principles. The application of RCI has increased productivity by reducing set-up and processing times, square footage, inventory levels, product costs and delivery times, while improving quality and enhancing member safety. The Corporation's RCI process involves production and administrative employees, management, customers and suppliers. The Corporation has facilitators, coaches and consultants dedicated to the RCI process and strives to involve all members in the RCI process. Manufacturing also plays a key role in the Corporation's concurrent product development process that primarily seeks to design new products for ease of manufacturability.

Product Development

The Corporation's product development efforts are primarily focused on developing end-user solutions that are relevant, differentiated and focused on quality, aesthetics, style, sustainable design and on reducing manufacturing costs. The Corporation accomplishes this through improving existing products, extending product lines, applying ergonomic research, improving manufacturing processes, applying alternative materials and providing engineering support and training to its operating units. The Corporation conducts its product development efforts at both the corporate and operating unit level. The Corporation invested approximately $21.1 million, $27.8 million, and $24.0 million in product development during fiscal 2009, 2008, and 2007, respectively, and has budgeted $21 million for product development in fiscal 2010.

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Intellectual Property

As of January 2, 2010, the Corporation owned 333 U.S. and 305 foreign patents and had applications pending for 32 U.S. and 64 foreign patents. In addition, the Corporation holds 171 U.S. and 378 foreign trademark registrations and has applications pending for 19 U.S. and 41 foreign trademarks.

The Corporation's principal office furniture products do not require frequent technical changes. The Corporation believes neither any individual office furniture patent nor the Corporation's office furniture patents in the aggregate are material to the Corporation's business as a whole.

The Corporation’s patents covering its hearth products protect various technical innovations. While the acquisition of patents reflects Hearth & Home’s position in the market as an innovation leader, the Corporation believes neither any individual hearth product patent nor the Corporation’s hearth product patents in the aggregate are material to the Corporation’s business as a whole.

The Corporation applies for patent protection when it believes the expense of doing so is justified, and the Corporation believes the duration of its registered patents is adequate to protect these rights. The Corporation also pays royalties in certain instances for the use of patents on products and processes owned by others.

The Corporation actively protects its trademarks it believes have significant value.

Sales and Distribution: Customers

The Corporation sells its office furniture products through five principal distribution channels. The first channel, which consists of independent, local office furniture and office products dealers, specializes in the sale of a broad range of office furniture and office furniture systems to business, government, education, health care entities and home office owners.

The second distribution channel comprises national office product distributors including Staples, Inc., Office Max Incorporated and Office Depot, Inc. These distributors sell furniture along with office supplies through a national network of dealerships and sales offices, which assist their customers with the evaluation of office space requirements, systems layout and product selection and design and office solution services provided by professional designers. All of these distributors also sell through retail office products superstores.

The third distribution channel, comprising corporate accounts, is where the Corporation has the lead selling relationship with the end-user. Installation and service are normally provided through a dealer.

The fourth distribution channel comprises wholesalers that serve as distributors of the Corporation's products to independent dealers, national supply dealers and superstores. The Corporation sells to the nation's largest wholesalers, United Stationers Inc. and S.P. Richards Company. Wholesalers maintain inventory of standard product lines for resale to the various dealers and retailers. They also special order products from the Corporation in customer-selected models and colors. The Corporation's wholesalers maintain warehouse locations throughout the United States, which enables the Corporation to make its products available for rapid delivery to retailers anywhere in the country.

The fifth distribution channel comprises direct sales of the Corporation's products to federal, state and local government offices .

The Corporation's office furniture sales force consists of regional sales managers, salespersons and firms of independent manufacturers' representatives who collectively provide national sales coverage. Sales managers and salespersons are compensated by a combination of salary and incentive bonus.

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Office products dealers, national wholesalers and retailers market their products over the Internet and through catalogs published periodically. These catalogs are distributed to existing and potential customers. The Corporation believes the inclusion of the Corporation's product lines in customer catalogs and e-business listings offers strong potential for increased sales of the listed product lines due to the exposure provided.

The Corporation also makes export sales through HNI International to office furniture dealers and wholesale distributors serving select foreign markets. Distributors are principally located in Latin America, the Caribbean and Middle East. With the acquisition of Lamex in 2006 the Corporation manufactures and distributes office furniture directly to end-users through independent dealers and distributors in Greater China and Asia.

Limited quantities of select finished goods inventories primarily built to order awaiting shipment are at the Corporation's principal manufacturing plants and at its various distribution centers.

Hearth & Home sells its fireplace and stove products through dealers, distributors and Corporation-owned distribution and retail outlets. The Corporation has a field sales organization of regional sales managers, salespersons, and firms of independent manufacturers' representatives.

The Corporation had one customer, United Stationers Inc., which accounted for approximately 9% of the Corporation’s consolidated net sales in fiscal 2009, 10% in fiscal 2008, and 11% in fiscal 2007. The substantial purchasing power exercised by large customers may adversely affect the prices at which the Corporation can successfully offer its products. In addition, there can be no assurance the Corporation will be able to maintain its customer relationships.

As of January 2, 2010, the Corporation had an order backlog of approximately $121.1 million, which will be filled in the ordinary course of business within the first few weeks of the current fiscal year. This compares with $130.8 million as of January 3, 2009, and $162.0 million as of December 29, 2007. Backlog, in terms of percentage of net sales, was 7.3%, 5.3%, and 6.3%, for fiscal 2009, 2008, and 2007, respectively. The Corporation’s products are typically manufactured and shipped within a few weeks following receipt of order. The dollar amount of the Corporation’s order backlog is, therefore, not considered by management to be a leading indicator of the Corporation’s expected sales in any particular fiscal period.

Competition

The Corporation is one of the largest office furniture manufacturers in the world and believes it is the largest provider of furniture to small- and medium-sized workplaces. The Corporation is the largest manufacturer and marketer of fireplaces in North America.

The office furniture industry is highly competitive, with a significant number of competitors offering similar products. The Corporation competes by emphasizing its ability to deliver compelling value products, solutions and a high level of customer service. The Corporation competes with large office furniture manufacturers, which cover a substantial portion of the North America market share in the project-oriented office furniture market, such as Steelcase Inc., Haworth, Inc., Herman Miller, Inc. and Knoll, Inc. The Corporation also competes with a number of other office furniture manufacturers, including The Global Group (a Canadian company), Kimball International, Inc., KI and Teknion Corporation (a Canadian company), as well as global importers. The Corporation faces significant price competition from its competitors and may encounter competition from new market entrants.

Hearth products, consisting of prefabricated fireplaces and related products, are manufactured by a number of national and regional competitors. The Corporation competes primarily against a broad range of manufacturers, including Travis Industries, Inc., Lennox International Inc., Monessen Hearth Systems Company, DESA Fmi LLC, Wolf Steel Ltd. (Napolean) and FPI Fireplace Products International Ltd.

Both office furniture and hearth products compete on the basis of performance, quality, price, complete and on-time delivery to the customer and customer service and support. The Corporation believes it competes principally by providing compelling value products designed to be among the best in their price range for product quality and performance, superior customer service and short lead-times. This is made possible, in part, by the Corporation's on-going investment in product development, highly efficient and low cost manufacturing operations and an extensive distribution network.

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For further discussion of the Corporation's competitive situation, refer to “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” later in this report.

Effects of Inflation

Certain business costs may, from time to time, increase at a rate exceeding the general rate of inflation. The Corporation’s objective is to offset the effect of inflation on its costs primarily through productivity increases in combination with certain adjustments to the selling price of its products as competitive market and general economic conditions permit.

Investments are routinely made in modernizing plants, equipment, support systems and RCI programs. These investments collectively focus on business simplification and increasing productivity which helps to offset the effect of rising material and labor costs. The Corporation also routinely employs ongoing cost control disciplines. In addition, the last-in, first-out (LIFO) valuation method is used for most of the Corporation's inventories, which ensures that changing material and labor costs are recognized in reported income and, more importantly, these costs are recognized in pricing decisions.

Environmental

The Corporation is subject to a variety of environmental laws and regulations governing use of materials and substances in products, the management of wastes resulting from use of certain material and the remediation of contamination associated with releases of hazardous substances used in the past. Although the Corporation believes it is in material compliance with all of the various regulations applicable to its business, there can be no assurance requirements will not change in the future or that the Corporation will not incur material costs to comply with such regulations. The Corporation has trained staff responsible for monitoring compliance with environmental, health and safety requirements. The Corporation’s environmental staff works with responsible personnel at each manufacturing facility, the Corporation’s environmental legal counsel and consultants on the management of environmental, health and safety issues. The Corporation’s ultimate goal is to reduce and, when practical, eliminate the generation of environmental pollutants in its manufacturing processes.

The Corporation’s environmental management system has earned the recognition of numerous state and federal agencies as well as non-government organizations. The Corporation’s lean manufacturing philosophy leverages the creativity of its members to eliminate waste and reduce cost. Aligning these continuous improvement initiatives with the Corporation’s environmental objectives creates a model of the triple bottom line of sustainable development where members work toward shared goals of personal growth, economic reward and a healthy environment for the future.

Over the past several years, the Corporation has expanded its environmental management system and established metrics to influence product design and development, supplier and supply chain performance, energy and resource consumption and the impacts of its facilities. In addition, the Corporation is providing sustainability training to senior decision makers and has assigned resources to documenting and communicating its progress to an increasingly knowledgable market. Integrating sustainable objectives into core business systems is consistent with the Corporation’s vision and ensures its commitment to being a sustainable enterprise remains a priority for all members.

Compliance with federal, state and local environmental regulations has not had a material effect on the capital expenditures, earnings or competitive position of the Corporation to date. The Corporation does not anticipate that financially material capital expenditures will be required during fiscal 2010 for environmental control facilities. It is management’s judgment that compliance with current regulations should not have a material effect on the Corporation’s financial condition or results of operations. However, there can be no assurance new environmental legislation and technology in this area will not result in or require material capital expenditures.

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Business Development

The development of the Corporation's business during the fiscal years ended January 2, 2010, January 3, 2009, and December 29, 2007, is discussed in “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” later in this report.

Available Information

Information regarding the Corporation’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, will be made available, free of charge, on the Corporation’s website at www.hnicorp.com , as soon as reasonably practicable after the Corporation electronically files such reports with or furnishes them to the Securities and Exchange Commission (the “SEC”). The Corporation’s information is also available from the SEC’s Public Reference room at 100 F Street, N.E., Washington, D.C. 20549, or on the SEC website at www.sec.gov .

Forward-Looking Statements

Statements in this Annual Report on Form 10-K to the extent that they are not statements of historical or present fact, including statements as to plans, outlook, objectives and future financial performance, are “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words, such as “anticipate,” “believe,” “could,” “confident,” “estimate,” “expect,” “forecast,” “hope,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and variations of such words, and similar expressions identify forward-looking statements.

Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation’s actual results in the future to differ materially from expected results. The most significant factors known to the Corporation that may adversely affect the Corporation’s business, operations, industries, financial position or future financial performance are described later in this report under the heading entitled “Item 1A. Risk Factors.” The Corporation cautions readers not to place undue reliance on any forward-looking statement which speaks only as of the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described elsewhere in this report, including under the heading “Item 1A. Risk Factors,” as well as others that the Corporation may consider immaterial or does not anticipate at this time. The risks and uncertainties described in this report, including those under the heading “Item 1A. Risk Factors,” are not exclusive and further information concerning the Corporation, including factors that potentially could materially affect the Corporation’s financial results or condition, may emerge from time to time.

The Corporation assumes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The Corporation advises you, however, to consult any further disclosures made on related subjects in future quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the SEC.

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ITEM 1A. RISK FACTORS

The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. If any of the following risks actually occur, our business, operating results, cash flows and financial condition could be materially adversely affected.

Unfavorable economic and market conditions could reduce our sales and profitability and as a result, our operating results may be adversely affected.

Over the past few years, economic conditions have deteriorated significantly in the U. S. and many of the countries and regions in which we do business, and, despite the possible beginning signs of the recovery in the U.S. and elsewhere, remain challenging for the foreseeable future. The recent downturns in the economy in the U.S. and in international markets have had, and may continue to have, a significant adverse impact on demand for our products. General business and economic conditions that could affect us include short-term and long-term interest rates, unemployment, inflation, fluctuations in debt and equity capital markets, limited availability of consumer financing and weak credit markets, the strength of the U.S. economy and the local economies in which we operate.

There could be a number of effects from these economic developments on our business, including: reduced demand for products; insolvency of our dealers, resulting in increased provisions for credit losses; insolvency of our key suppliers resulting in product delays; inability of customers to obtain credit to finance purchases of our products; decreased customer demand, including order delays or cancellations; and counterparty failures negatively impacting our treasury operations.

In addition, the current negative worldwide economic conditions and market instability makes it increasingly difficult for us, our customers and our suppliers to accurately forecast future product demand trends, which could cause us to incur excess costs. Additionally, this forecasting difficulty could cause a shortage of products, labor or materials used in our products that could result in an inability to satisfy demand for our products and a loss of market share.

We may need to take additional impairment charges related to goodwill and indefinite-lived intangible assets, which would adversely affect our results of operations.

Goodwill and other acquired intangible assets with indefinite lives are not amortized but are annually tested for impairment, and when an event occurs or circumstances change such that it is reasonably possible that an impairment may exist. We test for impairment annually during the fourth quarter of the year and whenever indicators of impairment exist. We test goodwill for impairment by first comparing the carrying value of net assets to the fair value of the reporting unit. If the fair value is determined to be less than carrying value, a second step is performed to determine the implied fair value of goodwill associated with the reporting unit. If the carrying value of goodwill exceeds the implied fair value of goodwill, such excess represents the amount of goodwill impairment, and, accordingly such impairment is recognized.

We estimate the fair values of the reporting units using discounted cash flows. Forecasts of future cash flows are based on our best estimate of longer-term broad market trends. We combine this trend data with estimates of current economic conditions in the U.S., competitor behavior, the mix of product sales, commodity costs, wage rates, the level of manufacturing capacity and the pricing environment. In addition, estimates of fair value are impacted by estimates of the market-participant-derived weighted average cost of capital. Changes in these forecasts could significantly change the amount of impairment recorded, if any.

We operate in a highly competitive environment and, as a result, we may not always be successful.

Both the office furniture and hearth products industries are highly competitive, with a significant number of competitors in both industries offering similar products. While competitive factors vary geographically and between differing sales situations, typical factors for both industries include: price; delivery and service; product design and features; product quality; strength of dealers and other distributors; and relationships with customers and key influencers, such as architects, designers, home-builders and facility managers. Our principal competitors in the office furniture industry include The Global Group, Haworth, Inc., Kimball International, Inc., Steelcase Inc., Herman Miller, Inc., Teknion Corporation, KI and Knoll, Inc. Our principal competitors in the hearth products industry include Travis Industries, Inc., Lennox International Inc., Monessen Hearth Systems Company, DESA Fmi LLC, Wolf Steel Ltd. (Napolean) and FPI Fireplace Products International Ltd. In both industries, most of our top competitors have an installed base of products that can be a source of significant future sales through repeat and expansion orders. These competitors manufacture products with strong acceptance in the marketplace and are capable of developing products that have a competitive advantage over our products.

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Our continued success will depend on many factors, including our ability to continue to manufacture and market high quality, high performance products at competitive prices and our ability to adapt our business model to effectively compete in the highly competitive environments of both the office furniture and hearth products industries. Our success is also subject to our ability to sustain and grow our positive brand reputation and recognition among existing and potential customers and use our brands and trademarks effectively in entering new markets.

In both the office furniture and hearth products industries, we also face significant price competition from our competitors and from new market entrants who primarily manufacture and source products from lower-cost countries. Such price competition impacts our ability to implement price increases or, in some cases, even maintain prices, which could lower our profit margins. In addition, we may not be able to maintain or raise the prices of our products in response to rising raw material prices and other inflationary pressures. Competition from low-cost Asian imports continues to represent a threat to our current market share in the office furniture industry.

The concentration of our customer base, changes in demand and order patterns from our customers, as well as the increased purchasing power of such customers, could adversely affect our business, operating results or financial condition.

We sell our products through multiple distribution channels. These distribution channels have been consolidating in the past several years and may continue to consolidate in the future. Such consolidation may result in a greater proportion of our sales being concentrated in fewer customers. The increased purchasing power exercised by larger customers may adversely affect the prices at which we can successfully offer our products. As a result of this consolidation, changes in the purchase patterns or the loss of a single customer may have a greater impact on our business, operating results or financial condition than such events would have had prior to such consolidation.

The growth in sales of private label products by some of our largest office furniture customers may reduce our revenue and adversely affect our business, operating results or financial condition.

Private label products are products sold under the name of the distributor or retailer, but manufactured by another party. Some of our largest customers have aggressive private label initiatives to increase sales of office furniture. If successful, they may reduce our revenue and inhibit our ability to raise prices and may, in some cases, even force us to lower prices, which could result in an adverse effect on our business, operating results or financial condition.

Increases in basic commodity, raw material and component costs, as well as disruptions to the supply of such basic commodities, raw materials and components, could adversely affect our profitability.

Fluctuations in the price, availability and quality of the commodities, raw materials and components used by us in manufacturing could have an adverse effect on our costs of sales, profitability and our ability to meet customers' demand. We source commodities, raw materials, and components from low-cost, international suppliers for both our office furniture and hearth products. From both domestic and international suppliers, the cost, quality and availability of commodities, raw materials and components, including steel, our largest raw material category, have been significantly affected in recent years by, among other things, changes in global supply and demand, changes in laws and regulations (including tariffs and duties), changes in exchange rates and worldwide price levels, natural disasters, labor disputes, terrorism and political unrest or instability. These factors could lead to further price increases or supply interruptions in the future. Our profit margins could be adversely affected if commodity, raw material and component costs remain high or escalate further, and we are either unable to offset such costs through strategic sourcing initiatives and continuous improvement programs or, as a result of competitive market dynamics, unable to pass along a portion of the higher costs to our customers.

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We are affected by the cost of energy, and increases in energy prices could adversely affect our gross margins and profitability.

Our gross margins and the profitability of our business operations are sensitive to the cost of energy because it is reflected in our cost of transportation, petroleum-based materials like plastics and operation of our manufacturing facilities. If the costs of petroleum-based products, operating our manufacturing facilities or transportation increase, it could adversely affect our gross margins and profitability.

We may not be successful in implementing and managing the risks inherent in our growth strategy.

As a part of our growth strategy, we seek to increase sales and market share by introducing new products, further enhancing our existing line of products and continuing to pursue complementary acquisitions. This strategy depends on our ability to increase sales through our existing customer network, principally dealers, wholesalers and retailers. Furthermore, the ability to effectuate and manage profitable growth will depend on our ability to contain costs, including costs associated with increased manufacturing, sales and marketing efforts, freight utilization, warehouse capacity, product development and acquisition efforts.

Our efforts to introduce new products that meet customer and workplace/home requirements may not be successful, which could limit our sales growth or cause our sales to decline.

To keep pace with market trends in both the office furniture and hearth products industries, we must periodically introduce new products. Such trends include changes in workplace and home design and increases in the use of technology, and evolving regulatory and industry requirements, including environmental, health, safety and similar standards for the workplace and home and for product performance. The introduction of new products in both industries requires the coordination of the design, manufacturing and marketing of such products, which may be affected by factors beyond our control. The design and engineering of certain of our new products can take up to a year or more, and further time may be required to achieve client acceptance. In addition, we may face difficulties in introducing new products if we cannot successfully align ourselves with independent architects, home-builders and designers who are able to design, in a timely manner, high quality products consistent with our image. Accordingly, the launch of any particular product may be later or less successful than we originally anticipated. Difficulties or delays in introducing new products or lack of customer acceptance of new products could limit our sales growth or cause our sales to decline, and may result in an adverse effect on our business, operating results or financial condition.

We intend to grow our business through additional acquisitions, alliances and joint venture arrangements, which could adversely affect our business, operating results or financial condition.

One of our growth strategies is to supplement our internal growth through acquisitions of, and alliances and joint venture arrangements with, businesses with technologies or products that complement or augment our existing products or distribution or add new products or distribution to our business. The benefits of an acquisition, alliance or joint venture may take more time than expected to develop or integrate into our operations, and we cannot guarantee any completed or future acquisitions, alliances or joint ventures will in fact produce any benefits. In addition, acquisitions, alliances and joint ventures involve a number of risks, including, without limitation:

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;

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potential loss of key employees or customers of the acquired businesses or adverse effects on existing business relationships with suppliers and customers;

adverse impact on overall profitability if acquired businesses do not achieve the financial results projected in our valuation models;

reallocation of amounts of capital from other operating initiatives or an increase in our leverage and debt service requirements to pay the acquisition purchase prices, which could in turn restrict our ability to access additional capital when needed or to pursue other important elements of our business strategy;

inaccurate assessment of undisclosed, contingent or other liabilities or problems and unanticipated costs associated with the acquisition; 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 our operating results.

Our ability to grow through acquisitions will depend, in part, on the availability of suitable acquisition candidates at an acceptable price, our ability to compete effectively for these acquisition candidates and the availability of capital to complete such acquisitions. These risks could be heightened if we complete several acquisitions within a relatively short period of time. In addition, there can be no assurance we will be able to continue to identify attractive opportunities or enter into any such transactions with acceptable terms in the future. If an acquisition is completed, there can be no assurance we will be able to successfully integrate the acquired entity into our operations or that we will achieve sales and profitability that justify our investment in such businesses. Any potential acquisition may not be successful and could adversely affect our business, operating results or financial condition.

We are subject to extensive environmental regulation and have exposure to potential environmental liabilities.

The past and present operation and ownership by us of manufacturing facilities and real property are subject to extensive and changing federal, state and local environmental laws and regulations, including those relating to discharges in air, water and land, the handling and disposal of solid and hazardous waste and the remediation of contamination associated with releases of hazardous substances. Compliance with environmental regulations has not had a material affect on our capital expenditures, earnings or competitive position to date; however, compliance with current laws or more stringent laws or regulations which may be imposed on us in the future, stricter interpretation of existing laws or discoveries of contamination at our real property sites which occurred prior to our ownership or the advent of environmental regulation may require us to incur additional expenditures in the future, some of which may be material.

The existence of various unfavorable macroeconomic and industry factors for a prolonged period could adversely affect our business, operating results or financial condition.

Office furniture industry revenues are impacted by a variety of macroeconomic factors such as service-sector employment levels, corporate profits, commercial construction and office vacancy rates. Industry factors, such as corporate restructuring, technology changes, corporate relocations, health and safety concerns, including ergonomic considerations, and the globalization of companies also influence office furniture industry revenues.

Hearth products industry revenues are impacted by a variety of macroeconomic factors as well, including housing starts, overall employment levels, interest rates, consumer confidence, energy costs, disposable income and changing demographics. Industry factors, such as technology changes, health and safety concerns and environmental regulation, including indoor air quality standards, also influence hearth products industry revenues. The U.S. homebuilding industry is currently experiencing a significant downturn, the duration and ultimate severity of which are still uncertain. Further deterioration of the economic conditions in the homebuilding industry and the hearth products market could further decrease demand for our hearth products and have additional adverse effects on our operating results.

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Increasing healthcare costs could adversely affect our business, operating results and financial condition.

We provide healthcare benefits to the majority of our members. Healthcare costs have continued to rise over time and could adversely affect our business, operating results and financial condition.

Our inability to improve the quality/capability of our network of independent dealers or the loss of a significant number of such dealers could adversely affect our business, operating results or financial condition.

In both the office furniture and hearth products industries, we rely in large part on a network of independent dealers to market our products to customers. We also rely upon these dealers to provide a variety of important specification, installation and after-market services to our customers. Our dealers may terminate their relationships with us at any time and for any reason. The loss or termination of a significant number of dealer relationships could cause difficulties for us in marketing and distributing our products, resulting in a decline in our sales, which may adversely affect our business, operating results or financial condition.

Our international operations expose us to risks related to conducting business in multiple jurisdictions outside the United States.

We primarily sell our products and report our financial results in U.S. dollars; however, we have increasingly been conducting business in countries outside the United States, which exposes us to fluctuations in foreign currency exchange rates. Paying our expenses in other currencies can result in a significant increase or decrease in the amount of those expenses in terms of U.S. dollars, which may affect our profits. In the future, any foreign currency appreciation relative to the U.S. dollar would increase our expenses that are denominated in that currency. Additionally, as we report currency in the U.S. dollar, our financial position is affected by the strength of the currencies in countries where we have operations relative to the strength of the U.S. dollar.

We periodically review our foreign currency exposure and evaluate whether we should enter into hedging transactions.

Our international sales and operations are subject to a number of additional risks, including, without limitation:

social and political turmoil, official corruption and civil unrest;

restrictive government actions, such as the imposition of trade quotas and tariffs and restrictions on transfers of funds;

changes in labor laws and regulations affecting our ability to hire, retain or dismiss employees;

the need to comply with multiple and potentially conflicting laws and regulations, including environmental laws and regulations;

preference for locally branded products and laws and business practices favoring local competition;

less effective protection of intellectual property;

unfavorable business conditions or economic instability in any particular country or region; and

difficulty in obtaining distribution and support.

We may not be able to maintain our effective tax rate.

We may not be able to maintain our effective tax rate because: (1) of future changes in tax laws or interpretations of such tax laws; (2) the losses incurred in certain jurisdictions may not offset the tax expense in profitable jurisdictions; (3) there are differences between foreign and U.S. income tax rates; and (4) many tax years are subject to audit by different tax jurisdictions, which may result in additional taxes payable.

Restrictions imposed by the terms of our existing credit facility and note purchase agreement may limit our operating and financial flexibility .

Our existing credit facility and note purchase agreement, dated as of April 6, 2006, pursuant to which we issued $150 million of senior, unsecured notes designated as Series 2006-A Senior Notes, limit our ability to finance operations, service debt or engage in other business activities that may be in our interest. Specifically, our credit facility restricts our ability to incur additional indebtedness, create or incur certain liens with respect to any of our properties or assets, engage in lines of business substantially different than those currently conducted by us, sell, lease, license, or dispose of any of our assets, enter into certain transactions with affiliates, make certain restricted payments or take certain restricted actions and enter into certain sale-leaseback arrangements. Our note purchase agreement contains customary restrictive covenants that, among other things, place limits on our ability to incur liens on assets, incur additional debt, transfer or sell our assets, merge or consolidate with other persons or enter into material transactions with affiliates. Our credit facility and note purchase agreement also require us to maintain certain financial covenants.

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Our failure to comply with the obligations under our credit facility may result in an event of default, which, if not cured or waived, may cause accelerated repayment of the indebtedness under the credit facility and could result in a cross default under our note purchase agreement. We cannot be certain we will have sufficient funds available to pay any accelerated repayments or that we will have the ability to refinance accelerated repayments on terms favorable to us or at all.

Costs related to product defects could adversely affect our profitability.

We incur various expenses related to product defects, including product warranty costs, product recall and retrofit costs and product liability costs. These expenses relative to product sales vary and could increase. We maintain reserves for product defect-related costs based on estimates and our knowledge of circumstances that indicate the need for such reserves. We cannot, however, be certain these reserves will be adequate to cover actual product defect-related claims in the future. Any significant increase in the rate of our product defect expenses could have a material adverse effect on operations.

We may require additional capital in the future, which may not be available or may be available only on unfavorable terms .

Our capital requirements depend on many factors, including capital improvements, tooling, new product development and acquisitions. To the extent our existing capital is insufficient to meet these requirements and cover any losses, we may need to raise additional funds through financings or curtail our growth and reduce our assets. Our ability to generate cash depends on economic, financial, competitive, legislative, regulatory and other factors that may be beyond our control. Future borrowings or financings may not be available to us under our credit facility or otherwise in an amount sufficient to enable us to pay our debt or meet our liquidity needs.

Any equity or debt financing, if available at all, could have terms that are not favorable to us. In addition, financings could result in dilution to our shareholders or the securities may have rights, preferences and privileges that are senior to those of our common stock. If our need for capital arises because of significant losses, the occurrence of these losses may make it more difficult for us to raise the necessary capital.

Our relationship with the U.S. government and various state and local governments is subject to uncertain future funding levels and federal, state and local procurement laws and is governed by restrictive contract terms; any of these factors could limit current or future business.

We derive a significant portion of our revenue from sales to various U.S. federal, state and local government agencies and departments. Our ability to compete successfully for and retain business with the U.S. government, as well as with state and local governments, is highly dependent on cost-effective performance. Our government business is highly sensitive to changes in procurement laws, national, international, state and local public priorities and budgets at all levels of government.

Our contracts with these government entities are subject to various statutes and regulations that apply to companies doing business with the government. The U.S. government as well as state and local governments can typically terminate or modify their contracts with us either for their convenience or if we default by failing to perform under the terms of the applicable contract. A termination arising out of our default could expose us to liability and impede our ability to compete in the future for contracts and orders with agencies and departments at all levels of government. Moreover, we are subject to investigation and audit for compliance with the requirements governing government contracts, including requirements related to procurement integrity, export controls, employment practices, the accuracy of records and reporting of costs. If we were found to not be a responsible supplier, or to have committed fraud or certain criminal offenses, we could be suspended or debarred from all further federal, state or local government contracting.

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Disruptions in financial markets may adversely impact availability and cost of credit and business and consumer spending patterns.

As noted in other risks identified above, our ability to make scheduled payments or to refinance debt obligations will depend on our operating and financial performance, which in turn is subject to prevailing economic conditions and to financial, business and other factors beyond our control. Despite the recent credit crisis and disruptions in the financial markets, including the bankruptcy or restructuring of certain financial institutions, we continue to believe the lenders participating in our revolving credit facility will be willing and able to provide financing in accordance with their contractual obligations. However, the current economic environment may adversely impact the availability and cost of credit in the future.

Disruptions in the financial markets may have an adverse effect on the U.S. and world economy, which could negatively impact business and consumer spending patterns. The overall tightening of credit in financial markets also adversely affects the ability of customers and suppliers to obtain financing for significant purchases and operations and could result in a decrease in or cancellation of orders for our products. There is no assurance on-going government responses to the disruptions in the financial markets will restore business and consumer confidence, stabilize the markets or increase liquidity and the availability of credit.

Changes in government regulation and increased focus on enforcement may significantly increase our operating costs.

The federal government has a broad agenda of potential legislative and regulatory changes, which if enacted, could significantly impact our profitability by imposing on us additional costs that most likely could not be recovered by increased pricing. These changes include, without limitation proposed legislation relating to:

universal healthcare and healthcare reform;

tax regulations increasing our effective tax rate;

union organizing activities; and

energy costs in manufacturing and cap and trade proposals.

In addition, the federal government has increased its focus on enforcement under a wide range of laws and regulations impacting our business, particularly in the following areas:

antitrust and competition;

government contracting;

securities and public company reporting;

labor and employment practices;

fraud and abuse; and

tax reporting.

Should we become the target of a government investigation or enforcement action, we could incur significant costs and suffer damage to our reputation which could adversely impact our business, operating results or financial condition.

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Our business is subject to a number of other miscellaneous risks that may adversely affect our business, operating results or financial condition.

Other miscellaneous risks include, without limitation:

uncertainty related to disruptions of business by accidents, third-party labor disputes, terrorism, military action, natural disasters, epidemic, acts of God or other force majeure events;

reduced demand for our storage products caused by changes in office technology, including the change from paper record storage to electronic record storage;

the effects of economic conditions on demand for office furniture and hearth products, customer insolvencies, bankruptcies and related bad debts and claims against us that we received preferential payments;

our ability to realize cost savings and productivity improvements from our cost containment, business simplification, manufacturing consolidation and logistical realignment initiatives;

increased foreign sourcing of components and finished goods could reduce our level of manufacturing in the United States and cause us to have excess capacity issues;

volatility in the market price and trading volume of equity securities may adversely affect the market price for our common stock;

changes in labor laws and regulations may affect our ability to hire, retain or dismiss members and the cost and structure of our corporate compliance practices;

changes in securities laws, SEC rules or NYSE listing standards may increase governmental and non-governmental organization oversight of our business, dictate changes in some of our corporate governance, securities disclosure and corporate compliance practices and cause our legal and financial accounting costs to increase;

our ability to protect our intellectual property;

labor or other manufacturing inefficiencies due to items such as new product introductions, a new operating system or turnover in personnel;

our ability to effectively manage working capital;

future impairment of assets such as facilities or equipment;

our ability to successfully implement information technology solutions;

potential claims by third parties that we infringed upon their intellectual property rights;

our insurance may not adequately (1) insulate us from expenses for product defects and the negligent acts and omissions of our members and agents and (2) compensate us for damages to our facilities and equipment and loss of business; and

our ability to retain our experienced management team and recruit other key personnel.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Corporation maintains its corporate headquarters in Muscatine, Iowa, and conducts its operations at locations throughout the United States, Canada, China, Hong Kong and Taiwan, which house manufacturing, distribution and retail operations and offices totaling an aggregate of approximately 10.4 million square feet. Of this total, approximately 2.7 million square feet are leased.

Although the plants are of varying ages, the Corporation believes they are well maintained, equipped with modern and efficient equipment, in good operating condition and suitable for the purposes for which they are being used. The Corporation has sufficient capacity to increase output at most locations by increasing the use of overtime or the number of production shifts employed.

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The Corporation's principal manufacturing and distribution facilities (200,000 square feet in size or larger) are as follows:

Location	Approximate Square Feet	Owned or Leased	Description of Use

Cedartown, Georgia	555,559	Owned	Manufacturing nonwood casegoods office furniture

Dongguan, China	1,007,716	Owned	Manufacturing wood and nonwood casegoods and seating office furniture

Florence, Alabama	304,365	Owned	Manufacturing wood and nonwood casegoods office furniture

Hickory, North Carolina	206,316	Owned	Manufacturing wood casegoods and seating office furniture

Lake City, Minnesota	241,500	Owned	Manufacturing metal prefabricated fireplaces (1)

Lithia Springs, Georgia	585,000	Leased	Warehousing office furniture

Mt. Pleasant, Iowa	288,006	Owned	Manufacturing metal prefabricated fireplaces (1)

Muscatine, Iowa	272,900	Owned	Manufacturing nonwood casegoods office furniture

Muscatine, Iowa	578,284	Owned	Warehousing office furniture

Muscatine, Iowa	236,100	Owned	Manufacturing nonwood casegoods office furniture

Muscatine, Iowa	636,250	Owned	Manufacturing nonwood casegoods and systems office furniture (1)

Muscatine, Iowa	237,800	Owned	Manufacturing nonwood seating office furniture

Orleans, Indiana	1,196,946	Owned	Manufacturing wood casegoods and seating office furniture (1)

Owensboro, Kentucky	311,575	Owned	Manufacturing wood seating office furniture

Wayland, New York	716,484	Owned	Manufacturing wood casegoods and seating office furniture (1)

(1)

Also includes a regional warehouse/distribution center

Other Corporation facilities, under 200,000 square feet in size, are located in various communities throughout the United States, Canada, China, Hong Kong and Taiwan. These facilities total approximately 3.0 million square feet with approximately 1.9 million square feet used for the manufacture and distribution of office furniture and approximately 1.0 million square feet for hearth products. Of this total, approximately 2.1 million square feet are leased. The Corporation also leases sales showroom space in office furniture market centers in several major metropolitan areas.

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There are no major encumbrances on Corporation-owned properties. Refer to Property, Plant, and Equipment in the Notes to Consolidated Financial Statements for related cost, accumulated depreciation and net book value data.

ITEM 3. LEGAL PROCEEDINGS

The Corporation is involved in various kinds of disputes and legal proceedings that have arisen in the ordinary course of its business, including pending litigation, environmental remediation, taxes and other claims. It is the Corporation’s opinion, after consultation with legal counsel, that liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation’s financial condition, although such matters could have a material effect on the Corporation’s quarterly or annual operating results and cash flows when resolved in a future period.

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

None.

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PART I, TABLE I

EXECUTIVE OFFICERS OF THE REGISTRANT

January 2, 2010

Name	Age	Family Relationship	Position	Position Held Since	Other Business Experience During Past Five Years

Stan A. Askren	49	None	Chairman of the Board Chief Executive Officer President Director	2004 2004 2003 2003

Steven M. Bradford	52	None	Vice President, General Counsel and Secretary	2008	President and Regional General Counsel for The Americas, ICI Group Services (2003-08); General Counsel, North America, ICI Paints (2004-08)

Gary L. Carlson	59	None	Vice President, Member and Community Relations	2007	President and CEO, Greater Muscatine Chamber of Commerce and Industry (2003-07)

Bradley D. Determan	48	None	Executive Vice President President, Hearth & Home Technologies Inc.	2005 2003

Jerald K. Dittmer	52	None	Executive Vice President, President, The HON Company	2008	Vice President and Chief Financial Officer (2001-08)

Tamara S. Feldman	49	None	Vice President, Financial Reporting	2001

Douglas L. Jones	51	None	Vice President and Chief Information Officer	2005	Vice President, Business Systems (2001-05)

Kelly J. McGriff	43	None	Treasurer and Vice President, Investor Relations	2009	Director, Marketing Services (2008-09); Manager, Bids and Marketing (2007-08); and Commercial Controller (2005-07), The HON Company

Marco V. Molinari	50	None	Executive Vice President President, HNI International Inc.	2006 2003	President, International and Business Development (2003-04); Vice President, HON Products, The HON Company (2004-06)

Alan R. Moorhead	58	None	Vice President, Internal Audit	2008	Director, Internal Audit (2006-08); Vice President, Audit Director, Assurance, Inc. (2001-06)

Michael Al. Mundy	38	None	Vice President and Controller	2009	CFO and Treasurer, Gencor Industries (2009); CFO, Stanley National Hardware (Division) (2008); Director of Finance, Sun Chemical Corporation (2003-08)

Jean M. Reynolds	52	None	Vice President, Corporate Marketing and e-Business	2008	President, Maxon Furniture Inc. (1999-09)

Kurt A. Tjaden	46	None	Vice President and Chief Financial Officer	2008	Vice President and Chief Financial Officer, Asia, Whirlpool Corporation (2007-08); Vice President and Chief Financial Officer, Pure Fishing, LLC (2001-06)

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The Corporation’s common stock is listed for trading on the New York Stock Exchange (NYSE), trading symbol HNI. As of year-end 2009, the Corporation had 8,257 stockholders of record.

Wells Fargo Shareowner Services, St. Paul, Minnesota, serves as the Corporation’s transfer agent and registrar of its common stock. Shareholders may report a change of address or make inquiries by writing or calling: Wells Fargo Shareowner Services, P.O. Box 64874, St. Paul, MN 55164-0874 or telephone 800/468-9716.

Common Stock Market Prices and Dividends (Unaudited) and Common Stock Market Price and Price/Earnings Ratio (Unaudited) are presented in the Investor Information section which follows the Notes to Consolidated Financial Statements filed as part of this report.

The Corporation expects to continue its policy of paying regular quarterly cash dividends. Dividends have been paid each quarter since the Corporation paid its first dividend in 1955. The average dividend payout percentage for the most recent three-year period has been 39% of prior year earnings. Future dividends are dependent on future earnings, capital requirements and the Corporation’s financial condition, and are declared in the sole discretion of the Corporation’s Board of Directors.

Directors and members of the Corporation receive common stock equivalents pursuant to the HNI Corporation Executive Deferred Compensation Plan and the HNI Corporation Directors Deferred Compensation Plan, respectively (collectively, the “Deferred Plans”). Common stock equivalents are hypothetical shares of common stock having a value on any given date equal to the value of a share of common stock. Common stock equivalents earn dividend equivalents that are converted into additional common stock equivalents but carry no voting rights or other rights afforded to a holder of common stock. The common stock equivalents credited to members and directors under the Deferred Plans are exempt from registration under Section 4(2) of the Securities Act of 1933 as private offerings made only to directors and members of the Corporation in accordance with the provisions of the Deferred Plans.

Under the Deferred Plans, each director or member participating in the Deferred Plans, may elect to defer the receipt of all or any portion of the compensation paid to such director or member by the Corporation to a cash or stock sub-account. All deferred payments to the stock sub-account are held in the form of common stock equivalents. Payments out of the deferred stock sub-accounts are made in the form of common stock of the Corporation (and cash as to any fractional common stock equivalent). In the fourth quarter of 2009, the directors and members, as a group, were credited with 3,587 common stock equivalents under the Deferred Plans. The value of each common stock equivalent, when credited, ranged from $25.27 to $27.63.

The information under the caption “Equity Compensation Plan Information: of the Corporation’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2010, is incorporated herein by reference.

The Corporation did not repurchase any of its shares during the fourth quarter ended January 2, 2010. As of January 2, 2010, $163.6 million was authorized and available for the repurchase of shares by the Corporation.

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ITEM 6. SELECTED FINANCIAL DATA — FIVE-YEAR SUMMARY

	2009			2008			2007			2006			2005
Per Common Share Data (Basic and Dilutive)
Income (Loss) from Continuing Operations Attributable to Parent Company – basic	$	(0.14	)	$	1.03		$	2.57		$	2.59		$	2.53
Income (Loss) from Continuing Operations Attributable to Parent Company – diluted	$	(0.14	)		1.02			2.55			2.57			2.51
Net Income (Loss) Attributable to Parent Company – basic	$	(0.14	)		1.03			2.58			2.46			2.51
Net Income (Loss) Attributable to Parent Company – diluted	$	(0.14	)		1.02			2.57			2.45			2.50
Cash Dividends		.86			.86			.78			.72			.62
Book Value – year-end		9.30			10.13			10.24			10.35			11.46
Net Working Capital – year-end		1.33			1.00			2.33			3.04			2.48
Operating Results (Thousands of Dollars)
Net Sales	$	1,656,289		$	2,477,587		$	2,570,472		$	2,679,803		$	2,433,316
Gross Profit as a % of Net Sales		34.5	%		33.4	%		35.2	%		34.6	%		36.3	%
Interest Expense	$	12,080		$	16,865		$	18,161		$	14,323		$	2,355
Income (Loss) from Continuing Operations		(6,259	)		45,607			119,446			129,499			138,156
Income (Loss) from Continuing Operations as a % of Net Sales		(0.4	)%		1.8	%		4.7	%		4.8	%		5.7	%
Discontinued Operations (a)	$	-		$	-		$	514		$	(6,297	)	$	(746	)
Net Income (Loss) Attributable to Parent Company		(6,442	)		45,450			120,378			123,375			137,420
Net Income (Loss) Attributable to Parent Company as a % of Net Sales		(0.4	)%		1.8	%		4.7	%		4.6	%		5.6	%
Cash Dividends	$	38,667		$	38,095		$	36,408		$	36,028		$	33,841
% Return on Average Shareholders’ Equity		(1.5	)%		10.0	%		25.2	%		22.6	%		21.8	%
Depreciation and Amortization	$	74,867		$	70,155		$	68,173		$	69,503		$	65,514
Financial Position (Thousands of Dollars)
Current Assets	$	360,271		$	417,841		$	489,072		$	504,174		$	486,598
Current Liabilities		300,142			373,625			384,461			358,542			358,174
Working Capital		60,129			44,216			104,611			145,632			128,424
Current Ratio		1.20			1.12			1.27			1.41			1.36
Total Assets	$	994,326		$	1,165,629		$	1,206,976		$	1,226,359		$	1,140,271
% Return on Beginning Assets Employed		0.3	%		7.0	%		15.8	%		18.1	%		21.2	%
Long-Term Debt and Capital Lease Obligations	$	200,000		$	267,343		$	281,091		$	285,974		$	103,869
Shareholders’ Equity		419,283			448,833			458,908			495,919			593,944
Current Share Data
Number of Shares Outstanding at Year-End		45,093,379			44,324,409			44,834,519			47,905,351			51,848,591
Weighted-Average Shares Outstanding During Year – basic		44,888,809			44,309,765			46,684,774			50,059,443			54,649,199
Weighted-Average Shares Outstanding During Year – diluted		44,888,809			44,433,945			46,925,161			50,374,758			55,033,741
Number of Shareholders of Record at Year-End		8,257			8,274			7,625			7,475			6,702
Other Operational Data
Capital Expenditures (Thousands of Dollars)	$	16,017		$	70,083		$	58,568		$	58,921		$	38,912
Members (Employees) at Year-End		8,748			12,241	(b)		13,271	(b)		14,170	(b)		12,504	(b)

(a)

Component reported as discontinued operations acquired in 2004.

(b)

Includes acquisitions completed during the fiscal year.

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

The following discussion of the Corporation’s historical results of operations and of its liquidity and capital resources should be read in conjunction with the Consolidated Financial Statements of the Corporation and related notes. Statements that are not historical are forward-looking and involve risks and uncertainties, including those discussed under the heading “Item 1A Risk Factors” and elsewhere in this report.

Overview

The Corporation has two reportable segments: office furniture and hearth products. The Corporation is the second largest office furniture manufacturer in the world and the nation’s leading manufacturer and marketer of gas and wood burning fireplaces. The Corporation utilizes its split and focus, decentralized business model to deliver value to its customers with various brands and selling models. The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for growth.

The Corporation’s results continued to be negatively impacted by macroeconomic pressures during 2009. Unemployment surged and small business confidence sank. New housing starts, which have fallen steadily since 2006, declined even further. Credit markets continued to contract. Businesses and individuals stopped spending on most discretionary purchases. These factors impacted the Corporation’s office furniture segment and the hearth segment dramatically during 2009. As a result the Corporation implemented actions to align its businesses with market realities while investing to improve competitive capabilities. These included reductions in staffing, short work weeks and other actions to reduce labor costs. The Corporation made the decision to close three office furniture manufacturing facilities and consolidate production into existing manufacturing facilities in 2009. The Corporation also made the decision to consolidate significant production from its Mount Pleasant hearth products plant to other existing hearth products manufacturing facilities allowing it to close distribution centers in other locations and move the operations to the Mount Pleasant facility.

Net sales during 2009 were $1.7 billion, a decrease of 33.1 percent, compared to net sales of $2.5 billion in 2008. The sales decline was driven by substantial weakness in both the supplies-driven and contract channels of the office furniture segment as well as significant declines in both the new construction and remodel-retrofit channels of the hearth products segment.

The Corporation recorded $25.0 million of goodwill and intangible impairment charges during 2009 related to reporting units acquired over the past five years in its office furniture segment due to current and projected market and economic conditions.

Management expects the current challenging market conditions to continue in 2010. The Corporation will continue to mitigate substantial economic and market weakness by eliminating waste, attacking structural cost and streamlining its business.

Critical Accounting Policies and Estimates

General

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the Consolidated Financial Statements, which have been prepared in accordance with Generally Accepted Accounting Principles (GAAP). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of the Corporation’s Board of Directors (the “Board”). Actual results may differ from these estimates under different assumptions or conditions.

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An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Management believes the following critical accounting policies reflect its more significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

Fiscal year-end – The Corporation follows a 52/53-week fiscal year which ends on the Saturday nearest December 31. Fiscal year 2009 ended on January 2, 2010; 2008 ended on January 3, 2009; and 2007 ended on December 29, 2007. The financial statements for fiscal year 2009 are on a 52-week basis; 2008 are on a 53-week basis; and 2007 are on a 52-week basis. A 53-week year occurs approximately every sixth year.

Revenue recognition – The Corporation normally recognizes revenue upon shipment of goods to customers. In certain circumstances, the Corporation does not recognize revenue until the goods are received by the customer or upon installation or customer acceptance based on the terms of the sale agreement. Revenue includes freight charged to customers; related costs are included in selling and administrative expense. Rebates, discounts and other marketing program expenses directly related to the sale are recorded as a reduction to sales. Marketing program accruals require the use of management estimates and the consideration of contractual arrangements subject to interpretation. Customer sales that achieve or do not achieve certain award levels can affect the amount of such estimates, and actual results could differ from these estimates. Future market conditions may require increased incentive offerings, possibly resulting in an incremental reduction in net sales at the time the incentive is offered.

Allowance for doubtful accounts receivable – The allowance for doubtful accounts receivable is based on several factors, including overall customer credit quality, historical write-off experience, the length of time a receivable has been outstanding and specific account analysis that projects the ultimate collectability of the account. As such, these factors may change over time causing the Corporation to adjust the reserve level accordingly.

When the Corporation determines a customer is unlikely to pay, a charge is recorded to bad debt expense in the income statement and the allowance for doubtful accounts is increased. When the Corporation is reasonably certain the customer cannot pay, the receivable is written off by removing the accounts receivable amount and reducing the allowance for doubtful accounts accordingly.

As of January 2, 2010, there was approximately $170 million in outstanding accounts receivable and $6 million recorded in the allowance for doubtful accounts to cover potential future customer non-payments. However, if economic conditions were to deteriorate significantly or one of the Corporation’s large customers declares bankruptcy, a larger allowance for doubtful accounts might be necessary. The allowance for doubtful accounts was approximately $9 million at year-end 2008 and $11 million at year-end 2007.

Inventory valuation – The Corporation valued 82% of its inventory by the last-in, first-out (“LIFO”) method at January 2, 2010. Additionally, the Corporation evaluates inventory reserves in terms of excess and obsolete exposure. This evaluation includes such factors as anticipated usage, inventory turnover, inventory levels and ultimate product sales value. As such, these factors may change over time causing the Corporation to adjust the reserve level accordingly. The Corporation’s reserves for excess and obsolete inventory were approximately $8 million at year-end 2009, $8 million at year-end 2008, and $9 million at year-end 2007.

Long-lived assets - The Corporation reviews long-lived assets for impairment as events or changes in circumstances occur indicating the amount of the asset reflected in the Corporation’s balance sheet may not be recoverable. The Corporation compares an estimate of undiscounted cash flows produced by the asset, or the appropriate group of assets, to the carrying value to determine whether impairment exists. The estimates of future cash flows involve considerable management judgment and are based upon the Corporation’s assumptions about future operating performance. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions. Asset impairment charges associated with the Corporation’s restructuring activities are discussed in Restructuring Related and Impairment Charges in the Notes to Consolidated Financial Statements.

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The Corporation’s continuous focus on improving the manufacturing process tends to increase the likelihood of assets being replaced; therefore, the Corporation is regularly evaluating the expected useful lives of its equipment which can result in accelerated depreciation.

Goodwill and other intangibles – The Corporation evaluates its goodwill for impairment on an annual basis during the fourth quarter or whenever indicators of impairment exist. The Corporation estimates the fair value of its reporting units using various valuation techniques, with the primary technique being a discounted cash flow analysis. The Corporation has eleven reporting units within its office furniture and hearth products operating segments, of which seven contained goodwill. These reporting units constitute components for which discrete financial information is available and regularly reviewed by segment management. Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. The estimate of fair value of each reporting unit is based on management’s projection of revenues, gross margin, operating costs and cash flows considering historical and estimated future results, general economic and market conditions as well as the impact of planned business and operational strategies. The valuations employ present value techniques to measure fair value and consider market factors. Management believes the assumptions used for the impairment test are consistent with those utilized by a market participant in performing similar valuations of its reporting units. A separate discount rate was utilized for each reporting unit with rates ranging from 11% to 12%. Management bases its fair value estimates on assumptions they believe to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates. In addition, for reasonableness, the summation of all reporting units’ fair values is compared to the Corporation’s market capitalization.

If the fair value of the reporting unit is less than its carrying value, an additional step is required to determine the implied fair value of goodwill associated with that reporting unit. The implied fair value of goodwill is determined by first allocating the fair value of the reporting unit to all of its assets and liabilities and then computing the excess of the reporting unit’s fair value over the amounts assigned to the assets and liabilities. If the carrying value of goodwill exceeds the implied fair value of goodwill, such excess represents the amount of goodwill impairment, and, accordingly such impairment is recognized.

As a result of the review performed in the fourth quarter of 2009, the Corporation determined the carrying amount of a reporting unit acquired the previous year in the office furniture segment exceeded its fair value. Management then compared the carrying value of goodwill to the implied fair value of the goodwill of this reporting unit, and concluded that $7 million of impairment charges needed to be recognized. Goodwill of $24 million remains on the balance sheet of this reporting unit as of January 2, 2010. A downward modification in forecasted results would result in additional impairments. The Corporation recorded $17 million of impairment charges in 2008 for reporting units acquired in the past few years. The reporting units impacted included an office furniture services unit, dealer distribution unit and a recent acquisition with goodwill charges of approximately $10 million, $5 million and $2 million, respectively.

The changes to fair value in the reporting unit that triggered impairment charges in the fourth quarter were primarily attributable to the continuing deterioration in market conditions which became apparent in the fourth quarter as management completed its annual strategic planning process and caused management to change its estimates of the timing of market recovery. The Corporation factored these current market conditions and estimates into its projected forecasts of sales, operating income and cash flows of each reporting unit through the course of its strategic planning process completed in the fourth quarter.

The significant estimates and assumptions used in estimating future cash flows of its reporting units are based on management’s view of longer-term broad market trends. Management combines this trend data with estimates of current economic conditions in the U.S., competitor behavior, the mix of product sales, commodity costs, wage rates, the level of manufacturing capacity, and the pricing environment. In addition, estimates of fair value are impacted by estimates of the market participant derived weighted average cost of capital. The Corporation’s cash flow projections in most of its reporting units assumed virtually flat revenue and cash flows in 2010 and that significant recovery would not begin until 2011. As a reasonableness test, management also compared the market capitalization of the Corporation at January 2, 2010 to the aggregate fair value of the reporting units, resulting in an implied control premium of approximately 25 percent. Management believes this implied control premium is reasonable, in light of the synergies across its operating units, lean manufacturing environment and strong position in the markets it serves.

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Goodwill of approximately $261 million remains on the consolidated balance sheet as of the end of fiscal 2009.

The Corporation also determines the fair value of indefinite lived trade names on an annual basis during the fourth quarter or whenever indication of impairment exists. The Corporation performed its fiscal 2009 assessment of indefinite lived trade names during the fourth quarter. The estimate of the fair value of the trade names was based on a discounted cash flow model using inputs which included: projected revenues from management’s long term plan, assumed royalty rates that could be payable if the trade names were not owned and a discount rate. As a result of the review, the Corporation determined the carrying value of certain trade names primarily associated with acquisitions over the past few years in the office furniture segment exceeded their fair value and concluded that an $18 million impairment charge needed to be recognized. A carrying value of $30 million for these trade names remains as of January 2, 2010. A minor downward modification in projected revenues would result in additional impairments. The Corporation recorded $5 million of impairment charges in 2008 related to trade names acquired over the past few years in the office furniture segment. A carrying value of all trade names of approximately $42 million remains on the consolidated balance sheet at the end of fiscal 2009.

The Corporation has definite lived intangibles that are amortized over their estimated useful lives. Impairment losses are recognized if the carrying amount of an intangible, subject to amortization, is not recoverable from expected future cash flows and its carrying amount exceeds its fair value. No impairment losses related to definite lived intangibles were recorded. Intangibles, net of amortization, of approximately $67 million are included on the consolidated balance sheet as of the end of fiscal 2009.

Key to recoverability of goodwill, indefinite-lived intangibles and long-lived assets is the forecast of the depth and duration of the economic downturn and its impact on future revenues, operating margins, and cash flows. Management’s projection for the U.S. office furniture and domestic hearth markets and global economic conditions is inherently subject to a number of uncertain factors, such as the depth and duration of the global economic slowdown, U.S housing market, credit availability and borrowing rates, and overall consumer confidence. In the near term, as management monitors the above factors, it is possible they may change the revenue and cash flow projections of certain reporting units, which may require the recording of additional asset impairment charges. There are certain reporting units that have been recently acquired and therefore have a historical cost that is closer to the current fair value. In addition to the reporting unit discussed above, a minor downward modification in forecasted results would result in an impairment charge for one other reporting unit within the office furniture segment. This reporting unit has approximately $7 million of goodwill at January 2, 2010. For all other reporting units, where impairment charges have not been recorded, the calculated fair value exceeds the carrying value by a large margin with the closest margin at greater than 60 percent of the carrying value. While the Corporation has recorded impairment charges connected to acquisitions in the office furniture segment over the past few years, management’s strategy with regards to these reporting units has not changed and the Corporation expects to receive additional value from these reporting units as the economy stabilizes.

Self-insured reserves – The Corporation is partially self-insured or carries high deductibles for general, auto, and product liability; workers’ compensation; and certain employee health benefits. The general, auto, product, and workers’ compensation liabilities are managed via a wholly-owned insurance captive; the related liabilities are included in the accompanying financial statements. As of January 2, 2010, those liabilities totaled $27 million. The Corporation’s policy is to accrue amounts in accordance with the actuarially determined liabilities. The actuarial valuations are based on historical information along with certain assumptions about future events. Changes in assumptions for such matters as the number or severity of claims, medical cost inflation, and magnitude of change in actual experience development could cause these estimates to change in the near term.

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Stock-based compensation – The Corporation measures the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes cost over the requisite service period. This resulted in a cost of approximately $3.8 million in 2009, $1.6 million in 2008, and $3.6 million in 2007. The decrease in cost in 2008 was due to a true-up adjustment to estimated forfeitures based on current year events.

Income taxes – Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Corporation’s assets and liabilities. The Corporation provides for taxes that may be payable if undistributed earnings of overseas subsidiaries were to be remitted to the United States, except for those earnings that it considers to be permanently reinvested.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) provided enhanced guidance for using fair value to measure assets and liabilities for financial assets and liabilities. The guidance also expanded the amount of required disclosure regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The guidance applies whenever other guidance requires (or permits) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. The Corporation adopted the guidance with regard to its financial assets and liabilities on December 30, 2007, the beginning of its 2008 fiscal year and with regard to its nonfinancial assets and liabilities on January 4, 2009, the beginning of its 2009 fiscal year. The adoption did not have a material impact on its financial statements.

In February, 2007, the FASB issued guidance which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective was to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Corporation adopted the guidance December 30, 2007, the beginning of fiscal 2008. As the Corporation did not elect to fair value any additional assets or liabilities, it did not have a material impact on its financial statements.

In December 2007, the FASB issued new guidance which requires a noncontrolling interest in a subsidiary to be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements. It also requires consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. The Corporation adopted the guidance January 4, 2009, the beginning of fiscal 2009. As a result of the adoption, the Corporation has reported noncontrolling interests as a component of equity in its Consolidated Balance Sheets and the net income or loss attributable to noncontrolling interests has been separately identified in its Consolidated Statements of Income. The prior periods presented have also been reclassified to conform to the current classification requirements.

In March 2008, the FASB expanded the disclosure requirements for derivative instruments and hedging activities with the intent to provide users of financial statements with an enhanced understanding of an entity’s derivative activity. The Corporation adopted the new guidance as of January 4, 2009.

In June 2009, the FASB issued guidance that identifies the sources of accounting principles and the framework for selecting principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with US GAAP (the GAAP hierarchy). The Corporation adopted the new guidance beginning October 3, 2009. This guidance had no impact on the Corporation’s financial statements.

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Results of Operations

The following table sets forth the percentage of consolidated net sales represented by certain items reflected in the Corporation’s statements of income for the periods indicated.

Fiscal	2009			2008			2007
Net Sales		100.0	%		100.0	%		100.0	%
Cost of products sold		65.5			66.6			64.8
Gross profit		34.5			33.4			35.2
Selling and administrative expenses		31.8			29.0			27.3
Restructuring related charges		2.4			1.0			0.4
Operating income		0.2			3.4			7.5
Interest income (expense) net		(0.7	)		(0.6	)		(0.7	)
Income (loss) from continuing operations before income taxes		(0.5	)		2.8			6.9
Income taxes		(0.1	)		1.0			2.2
Net income attributable to the noncontrolling interest		0.0			0.0			0.0
Income (loss) from continuing operations attributable to the Parent Company		(0.4	)%		1.8	%		4.7	%

Net Sales

Net sales during 2009 were $1.7 billion, a decrease of 33.1 percent, compared to net sales of $2.5 billion in 2008. Acquisitions contributed $10 million or 0.4 percentage points of sales. Higher price realization of $83 million was offset by significant weakness in both the supplies driven and contract channels of the office furniture segment and lower volume in the hearth products segment. Net sales during 2008 were $2.5 billion, a decrease of 3.6 percent, compared to net sales of $2.6 billion in 2007. Acquisitions contributed $118 million or 4.6 percentage points of sales. Higher price realization of $66 million was offset by soft demand in the supplies driven channel of the office furniture segment and lower volume in the hearth products segment.

Gross Profit

Gross profit as a percent of net sales increased 1.1 percentage points in 2009 as compared to 2008 due to better price realization, lower material costs and cost reduction initiatives offset partially by lower volume. Gross profit as a percent of net sales decreased 1.8 percentage points in 2008 as compared to 2007 due to lower volume, higher material costs and restructuring and transition costs offset partially by better price realization.

Selling and Administrative Expenses

Selling and administrative expenses decreased 26.7 percent in 2009 and increased 2.2 percent in 2008. The decrease in 2009 was due to lower volume related expenses, lower fuel costs, improved distribution efficiencies, cost control initiatives and gains from the sale of a facility and a corporate airplane. These were offset partially by the impact of prior year favorable adjustments related to the fair value of mandatorily redeemable liabilities from prior acquisitions, increased costs from acquisitions and transition costs related to the various plant consolidations. The increase in 2008 was due to increased freight and distribution costs due to freight increases and fuel surcharges, additional costs from acquisitions, increased costs related to new product development and gains recorded in 2007 from the sale of a facility and a corporate airplane. These were offset partially by lower volume related expenses, lower incentive based compensation costs, favorable adjustments to the current fair value of mandatorily redeemable liabilities from prior acquisitions and cost control initiatives.

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Selling and administrative expenses include freight expense for shipments to customers, product development costs and amortization expense of intangible assets. Refer to Summary of Significant Accounting Policies and Goodwill and Other Intangible Assets in the Notes to Consolidated Financial Statements for further information regarding the comparative expense levels for these expense items.

Restructuring and Impairment Charges

During 2009, the Corporation made the decision to close three office furniture facilities in South Gate, California; Louisburg, North Carolina and Owensboro, Kentucky and consolidate production into existing office furniture manufacturing facilities. In connection with the closure of these facilities, the Corporation recorded $12.6 million of pre-tax charges which included $2.7 million of accelerated depreciation of machinery and equipment recorded in cost of sales, and $9.9 million of severance and facility exit costs which were recorded as restructuring costs in 2009. The Corporation expects to incur additional restructuring and transition costs in 2010 of approximately $3 to $4 million in connection with these closures.

The Corporation made the decision to consolidate significant production from its hearth product Mount Pleasant, Iowa plant to other existing hearth products manufacturing facilities. Additionally the Corporation will close hearth products distribution centers in Alsip, Illinois and Lake City, Minnesota and transfer operations to its Mount Pleasant facility. The Corporation’s hearth product segment disposed and consolidated several retail and distribution locations during 2009. In connection with these activities, the Corporation recorded $6.7 million of pre-tax charges which included $1.2 million of accelerated depreciation of machinery and equipment recorded in cost of sales, and $5.5 million of severance and facility exit costs, including accelerated depreciation of $1.4 million and write-off of goodwill of $0.6 million, which were recorded as restructuring costs in 2009.

As part of the Corporation’s annual impairment review, management concluded due to market and economic conditions that a portion of its goodwill and indefinite-lived intangibles had carrying values greater than their fair market value and recorded an impairment charge of $25.0 million in 2009 and $21.8 million in 2008.

During 2008, the Corporation completed the shutdown of an office furniture facility in Richmond, Virginia, consolidated production into other manufacturing locations, closed two distribution centers and started up a new distribution center. The Corporation announced and started these activities during third quarter 2007. In connection with the shutdown of the Richmond facility, the Corporation recorded $4.4 million of pre-tax charges which included $0.6 million of accelerated depreciation of machinery and equipment recorded in cost of sales, and $3.8 million of severance recorded as restructuring costs during 2007. During 2008, the Corporation incurred $4.2 million of current period charges which included $0.4 million of accelerated depreciation of machinery and equipment recorded in cost of sales and $3.8 million of other costs which were recorded as restructuring costs.

The Corporation made the decision in 2007 to sell several small non-core components of its office furniture services business and recorded $2.7 million of impairment charges, included in the restructuring related and impairment charges line item on the statement of income, to reflect the fair market value of the assets being held for sale.

The Corporation’s hearth product segment consolidated some of its service and distribution locations during 2007. In connection with those consolidations, the Corporation recorded $1.1 million of severance and facility exit costs which were recorded as restructuring costs in 2007. The Corporation incurred $0.3 million of current period charges during 2008 which were recorded as restructuring costs.

During 2007, the Corporation completed the shutdown of an office furniture facility, which began in the fourth quarter of 2006. The facility was located in Monterrey, Mexico and production from this facility was consolidated into other locations. In connection with this shutdown, the Corporation recorded $0.8 million of severance costs in 2006. The Corporation incurred $2.1 million of current period charges during 2007.

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Operating Income

Operating income was $4.0 million in 2009, a decrease of 95.3 percent compared to $84.9 million in 2008. The decrease was due to lower volume in all channels of the office furniture and hearth products segments, higher restructuring, transition and impairment charges and favorable adjustments recorded in 2008 to the fair value of mandatorily redeemable liabilities from prior acquisitions. These were offset partially by improved price realization, lower input costs, improved distribution efficiencies, cost control initiatives and gains recorded on the sale of a facility and a corporate airplane. Operating income was $84.9 million in 2008, a decrease of 56.2 percent compared to $194 million in 2007. The decrease in 2008 was due to lower volume in the supplies-driven channel of the office furniture segment and the hearth products segment, higher material and freight and distribution costs, investments in product development, restructuring, transition and impairment charges, gains recorded in 2007 from the sale of a facility and a corporate airplane, and severance costs. These were offset partially by improved price realization, lower volume related and incentive based compensation expenses, favorable adjustments to the current fair value of mandatorily redeemable liabilities from prior acquisitions and cost control initiatives.

Income (Loss) From Continuing Operations

Income from continuing operations in 2009, which excludes the Corporation’s discontinued business (see Discontinued Operations in the Notes to Consolidated Financial Statements), was a loss of $6.3 million compared with income of $45.6 million in 2008, a 113.7 percent decrease. The current year loss from continuing operations was positively impacted by decreased interest expense of $4.8 million due to lower debt levels. Income from continuing operations in 2008 was $45.6 million compared with $119.4 million in 2007, a 61.8 percent decrease. Income from continuing operations was positively impacted by decreased interest expense of $1.3 million on moderate debt levels due to lower average interest rates. Income from continuing operations per diluted share decreased by 113.7 percent to ($0.14) in 2009 and decreased by 60.0 percent to $1.02 in 2008.

Discontinued Operations

During December 2006, the Corporation committed to a plan to sell a small non-core component of its office furniture segment. The Corporation reduced the assets to the fair market value and classified them as held for sale. The sale was completed during the second quarter of 2007. Revenues and expenses associated with this component are presented as discontinued operations for all periods presented. This operation was formerly reported within the Office Furniture segment. Refer to Discontinued Operations in the Notes to Consolidated Financial Statements for further information.

Net Income (Loss) Attributable to Parent Company

Net income attributable to parent company decreased 114.1 percent to a loss of $6.4 million in 2009 compared to income of $45.5 million in 2008 which was a decrease of 62.2 percent compared to 2007. Net income per diluted share decreased by 113.7 percent to ($0.14) in 2009 and decreased by 60.3 percent to $1.02 in 2008. Net income per diluted share was positively impacted $0.05 per share in 2008 by the Corporation’s share repurchase program.

Office Furniture

Office furniture comprised 83 percent, 83 percent and 82 percent of consolidated net sales for 2009, 2008, and 2007, respectively. Net sales for office furniture decreased 33 percent in 2009 to $1.37 billion compared to $2.05 billion in 2008. Acquisitions contributed $10 million of additional sales. Organic sales decreased $694 million or 34 percent including increased price realization of $77 million due to substantial weakness in both the supplies-driven and contract channels which were both impacted by the current economic conditions. Net sales for office furniture decreased 3 percent in 2008 to $2.05 billion compared to $2.11 billion in 2007. Acquisitions contributed $61 million of additional sales. Organic sales decreased $115 million or 5 percent, including increased price realization of $50 million, due to softness in the supplies-driven channel. BIFMA reported 2009 shipments down 30 percent from 2008 levels which were down 2 percent from 2007 levels.

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Operating profit as a percent of net sales was 3.7 percent in 2009, 4.9 percent in 2008, and 9.2 percent in 2007. The decrease in operating margins in 2009 was due to additional restructuring and impairment charges of $9 million compared to 2008 as well as lower volume and the impact of prior year favorable adjustments to the current fair value of mandatorily redeemable liabilities from prior acquisitions. These were partially offset by increased price realization, lower material costs, improved distribution efficiencies, lower transition costs and cost control initiatives. The decrease in operating margins in 2008 was due to additional restructuring and impairment charges of $17 million compared to 2007 as well as lower volume, higher material and fuel costs, transition costs and severance expenses offset partially by better price realization, cost reduction initiatives, lower incentive based compensation and favorable adjustments to the current fair value of mandatorily redeemable liabilities from prior acquisitions.

Hearth Products

Hearth products sales decreased 32.5 percent in 2009 to $286 million compared to $424 million in 2008. The decrease was due to significant declines in both the new construction and remodel-retrofit channels. Hearth products sales decreased 8 percent in 2008 to $424 million compared to $462 million in 2007. New acquisitions contributed $57 million of net sales. The decrease in organic sales was due to the continuing decline in new home construction. This was partially offset by the high demand for alternative fuel products.

Operating loss as a percent of sales in 2009 was 6.0 percent compared to operating profit as a percent of sales of 2.8 percent and 7.9 percent in 2008 and 2007, respectively. The decrease in operating margins in 2009 was due to lower volume and higher restructuring and transition costs offset partially by cost reduction initiatives. The decrease in operating margins in 2008 was due to lower overall volume, rising material costs and increased mix of lower margin remodel/retrofit business offset partially by price increases, cost reduction initiatives and lower restructuring expenses.

Liquidity and Capital Resources

Cash Flow – Operating Activities

Cash generated from operating activities in 2009 totaled $193.2 million compared to $174.4 million generated in 2008. Changes in working capital balances resulted in a $97.3 million source of cash in the current fiscal year compared to a $30.3 million source of cash in the prior year.

The source of cash related to working capital balances in 2009 was primarily driven from lower trade receivables of $74.6 million and lower inventory of $19.1 million due to strong collection efforts and lower sales. These sources of cash were offset partially by decreased current liabilities of $5.8 million. The decrease in current liabilities is comprised of $31.9 million of other accruals namely compensation, retirement and marketing expense accruals offset by a $17.6 million increase in trade accounts payable and $8.5 million in tax-related accruals.

The source of cash related to working capital balances in 2008 was primarily driven by lower trade receivables of $58.6 million and lower inventory of $31.8 million due to strong collection efforts and the company wide shutdown for the last two weeks of the fiscal year. These sources of cash were offset partially by decreased current liabilities of $60.4 million. The decrease in current liabilities was comprised of $36.5 million of decreased trade accounts payable, $1.3 million in tax-related accruals and $22.6 million of other accruals namely compensation, retirement and marketing expense accruals.

The Corporation places special emphasis on the management and control of its working capital with a particular focus on trade receivables and inventory levels. The success achieved in managing receivables is in large part a result of doing business with quality customers and maintaining close communication with them. During these uncertain economic times management is placing additional emphasis on monitoring its trade receivables. Management believes its recorded trade receivable valuation allowances at the end of 2009 are adequate to cover the risk of potential bad debts. Allowances for non-collectible trade receivables, as a percent of gross trade receivables, totaled 3.8 percent, 3.6 percent, and 3.8 percent at the end of fiscal years 2009, 2008, and 2007, respectively. The Corporation’s inventory turns were 15, 17, and 16, for 2009, 2008, and 2007, respectively.

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Cash Flow – Investing Activities

Capital expenditures including capitalized software were $17.6 million in 2009, $71.5 million in 2008, and $58.9 million in 2007. These expenditures have consistently focused on machinery and equipment and tooling required to support new products, continuous improvements in our manufacturing processes and cost savings initiatives. The increase in capital expenditures in 2008 was due to the facility consolidations that were completed in 2008. The Corporation anticipates capital expenditures for 2010 to total $25 to $35 million and be primarily related to new products and operational process improvement.

Included in 2009 investing activities is a net cash outflow of $0.5 million for a contingent purchase commitment related to the Harman Stove Company (“Harman”) acquisition in 2007. In 2008, the investing activities reflected a net cash outflow of $75.5 million related to the acquisition of HBF. The addition of HBF bolstered the Corporation’s contract office furniture business with its strong brand recognition among interior designers and emphasis on new products. In 2007, the investing activities reflected a cash outflow of $41.7 million related to the acquisition of Harman and two small office furniture dealers. The acquisition of Harman added to the hearth products segment alternative fuel business. Refer to the Business Combination note in the Notes to Consolidated Financial Statements for additional information.

In 2009, the Corporation completed the sale of a corporate airplane and a facility located in Lakeville, Minnesota. In 2008, the Corporation completed the sale of a facility located in Richmond, Virginia. In 2007, the Corporation completed the sale of a corporate airplane and a facility located in Monterrey, Mexico. The proceeds from these sales of $5 million, $5 million and $11 million are reflected in the Consolidated Statement of Cash Flows as “Proceeds from sale of property, plant and equipment” for 2009, 2008 and 2007, respectively.

In 2009, the Corporation sold $21 million of long-term investments and used the proceeds to repay debt.

Cash Flow – Financing Activities

On June 30, 2008, the Corporation entered into a term loan credit agreement which allowed for a one-time borrowing of $50 million in the form of a term loan. The Corporation paid off the term loan during 2009.

The Corporation has a revolving credit facility that provides for a maximum borrowing of $300 million. Amounts borrowed under the revolving credit facility may be borrowed, repaid and reborrowed from time to time until January 28, 2011. As of January 2, 2010, $50 million was outstanding under the revolving credit facility and classified as long-term as the Corporation does not expect to repay the borrowings within a year. The Corporation plans to negotiate a new revolving credit facility before the current one expires.

In 2006, the Corporation refinanced $150 million of borrowings outstanding under the revolving credit facility with 5.54 percent, ten-year unsecured Senior Notes due in 2016 issued through the private placement debt market. Interest payments are due semi-annually on April 1 and October 1 of each year and the principal is due in a lump sum in 2016.

Additional borrowing capacity of $250 million, less amounts used for designated letters of credit, is available through the revolving credit facility in the event cash generated from operations should be inadequate to meet future needs. The Corporation does not currently expect future capital resources to be a constraint on planned growth. Certain of the Corporation’s credit agreements include covenants that limit the assumption of additional debt and lease obligations. Long-term debt, including capital lease obligations, was 32% of total capitalization as of January 2, 2010, 37% as of January 3, 2009, and 38% as of December 29, 2007.

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The credit agreement pertaining to the revolving credit facility and the note purchase agreement pertaining to the Senior Notes contain covenants that, among other things, restrict, subject to certain exceptions, our ability to:

incur additional indebtedness and make guarantees;

create liens on assets;

engage in any material line of business substantially different from existing lines of business;

sell assets;

make investments, loans and advances, including acquisitions;

engage in sale-leaseback transactions in excess of $50 million in the aggregate;

repay the Senior Notes or enter into certain amendments thereof; and

engage in certain transactions with affiliates.

The credit agreement governing the Corporation’s revolving credit facility contains a number of covenants, including covenants requiring maintenance of the following financial ratios as of the end of any fiscal quarter:

a consolidated interest coverage ratio of not less than 4.0 to 1.0, based upon the ratio of (a) consolidated EBITDA (as defined in the credit agreement) for the last four fiscal quarters to (b) the sum of consolidated interest charges; and

a consolidated leverage ratio of not greater than 3.0 to 1.0, based upon the ratio of (a) the quarter-end consolidated funded indebtedness (as defined in the credit agreement) to (b) consolidated EBITDA for the last four fiscal quarters.

The note purchase agreement pertaining to the Corporation’s Senior Notes also contains a number of covenants, including a covenant requiring maintenance of consolidated debt to consolidated EBITDA (as defined in the note purchase agreement) of not greater than 3.5 to 1.0, based upon the ratio of (a) the quarter-end consolidated funded indebtedness (as defined in the note purchase agreement) to (b) consolidated EBITDA for the last four fiscal quarters.

The revolving credit facility and Senior Notes are the primary sources of committed funding from which the Corporation finances its planned capital expenditures, strategic initiatives such as repurchases of common stock and certain working capital needs. Non-compliance with the various financial covenant ratios could prevent the Corporation from being able to access further borrowings under the revolving credit facility, require immediate repayment of all amounts outstanding with respect to the revolving credit facility and Senior Notes and increase the cost of borrowing.

The most restrictive of the financial covenants is the consolidated leverage ratio requirement of 3.0 to 1.0 included in the credit agreement governing the revolving credit facility. Under that credit agreement, adjusted EBITDA is defined as consolidated net income before interest expense, income taxes and depreciation and amortization of intangibles, as well as non-cash nonrecurring charges and all non-cash items increasing net income. At January 2, 2010, the Corporation was well below this ratio and was in compliance with all of the covenants and other restrictions in the credit agreement and note purchase agreement. The Corporation currently expects to remain in compliance over the next twelve months.

In 2008, the Corporation entered into an interest rate swap agreement with one of its relationship banks, designated as a cash flow hedge, for purposes of managing its benchmark interest rate fluctuation risk. The fair value of its interest rate swap arrangement, as further described in the Derivative Financial Instrument note in the Notes to Consolidated Financial Statements, was a negative $2.5 million at the end of 2009. The fair value of the swap arrangement changes based on fluctuations in market interest rates. The changes in fair value are recorded as a component of accumulated other comprehensive income in the equity section of the Corporation’s consolidated balance sheet. This interest rate swap had the effect of increasing total interest expense by $1.7 million in 2009.

During 2009, the Corporation did not repurchase any shares of its common stock. During 2008, the Corporation repurchased 1,004,700 shares of its common stock at a cost of approximately $28.6 million, or an average price of $28.42. The Board of Directors authorized $200 million on August 8, 2006, and an additional $200 million on November 9, 2007, for repurchases of the Corporation’s common stock. As of January 2, 2010, approximately $163.6 million of this authorized amount remained unspent. During 2007, the Corporation repurchased 3,581,707 shares of its common stock at a cost of approximately $147.7 million, or an average price of $41.23.

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A cash dividend has been paid every quarter since April 15, 1955, and quarterly dividends are expected to continue. Cash dividends were $0.86 per common share for 2009, $0.86 for 2008, and $0.78 for 2007. The last increase was a 10.3 percent increase in the quarterly dividend effective with the February 29, 2008, dividend payment for shareholders of record at the close of business on February 22, 2008. The average dividend payout percentage for the most recent three-year period has been 39 percent of prior year earnings.

Cash, cash equivalents and short-term investments totaled $93.4 million at the end of 2009 compared to $49.3 million at the end of 2008 and $43.8 million at the end of 2007. These funds, coupled with cash from future operations and additional borrowings, if needed, are expected to be adequate to finance operations, planned improvements and internal growth. Due to the volatile and uncertain economic outlook for 2010, the Corporation will manage cash to maintain strategic flexibility. The Corporation currently expects to be able to satisfy its cash flow needs over the next twelve months with existing facilities.

Contractual Obligations

The following table discloses the Corporation’s obligations and commitments to make future payments under contracts:

	Payments Due by Period
(In thousands)	Total		Less than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 Years
Long-term debt obligations, including estimated interest (1)	$	255,247	$	10,660	$	67,579	$	16,620	$	160,388
Capital lease obligations		40		40		-		-		-
Operating lease obligations		97,791		31,640		39,957		12,503		13,691
Purchase obligations (2)		62,490		62,490		-		-		-
Other long-term obligations (3)		28,575		1,452		8,577		2,557		15,989
Total	$	444,143	$	106,282	$	116,113	$	31,680	$	190,068

(1)

Interest has been included for all debt at either the fixed rate or variable rate in effect as of January 2, 2010, as applicable.

(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, mandatory purchases of the remaining unowned interest in an acquisition, 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.

Litigation and Uncertainties

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Looking Ahead

Management believes the challenging market conditions will continue in 2010. It is unclear when recovery will occur in the office furniture market, and while there are early indications the worst is over in housing, the recovery remains uncertain with only modest improvement likely in 2010. The Corporation has adjusted the cost structure of its various businesses to the current conditions and believes they are strategically well positioned to increase market share and grow sales.

The Corporation will focus on its core customers and core market segments, respond to customers’ needs and the demands of the market. It will continue to adjust to changing market conditions and fiercely manage cash. The Corporation will continue to invest in new products, brand development, selling initiatives and build its e-business capabilities. The Corporation will continue its drive for best-cost/lean enterprise.

The Corporation remains focused on creating long-term shareholder value by growing its business through investment in building brands, product solutions and selling models, enhancing its strong member-owner culture and remaining focused on its long-standing rapid continuous improvement programs to build best total cost and a lean enterprise.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the normal course of business, the Corporation is subjected to market risk associated with interest rate movements. Interest rate risk arises from our variable interest debt obligations. For information related to the Corporation’s long-term debt, refer to the Long-Term Debt disclosure in the Notes to Consolidated Financial Statements filed as part of this report. As of January 2, 2010, the Corporation has one interest rate swap agreement. Under the interest rate swap agreement, the Corporation pays a fixed rate of interest and receives a variable rate of interest equal to the one-month London Interbank Offered Rate (“LIBOR”) as determined on the last day of each monthly settlement period on an aggregated notational principal amount of $50 million. The interest rate swap derivative instrument is held and used by the Corporation as a tool for managing interest rate risk. It is not used for trading or speculative purposes. The fair market value of the effective swap instrument was negative $2.5 million at January 2, 2010. The impact of this swap instrument on total interest expense was an addition to interest expense of $1.7 million in 2009. The Corporation does not currently have any significant foreign currency exposure.

The Corporation is exposed to risks arising from price changes for certain direct materials and assembly components used in its operations. The most significant material purchases and cost for the Corporation are for steel, plastics, textiles, wood particleboard and cartoning. Steel is the most significant raw material used in the manufacturing of products. The market price of plastics and textiles in particular are sensitive to the cost of oil and natural gas. Oil, natural gas and diesel fuel prices have experienced high volatility in the last several years and as a result the costs of plastics, textiles and transportation have also been volatile. The cost of wood particleboard has been impacted by continued downsizing of production capacity as well as increased volatility in input and transportation costs. All of these materials are impacted increasingly by global market pressure and impacts. The Corporation works to offset these increased costs through global sourcing initiatives and price increases on its products, however, historically margins have been negatively impacted due to the lag between cost increases and the Corporation’s ability to increase its prices. The Corporation believes future market price increases on its key direct materials and assembly components are likely. Consequently, it views the prospect of such increases as an outlook risk to the business.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements listed under Item 15(a)(1) and (2) are filed as part of this Report.

The Summary of Unaudited Quarterly Results of Operations follows the Notes to Consolidated Financial Statements filed as part of this Report.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of management, the Chief Executive Officer and Chief Financial Officer of the Corporation have evaluated the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures as defined in Rules 13a – 15(e) and 15d – 15(e) under the Exchange Act. As of January 2, 2010, and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective. There have not been any changes in the Corporation’s internal control over financial reporting that occurred during the fiscal quarter ended January 2, 2010 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Management’s annual report on internal control over financial reporting and the attestation report of the Corporation’s independent registered public accounting firm are included in Item 15. Exhibits, Financial Statement Schedules of this report under the headings “Management Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public Accounting Firm,” respectively.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information under the caption "Election of Directors" of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2010, is incorporated herein by reference. For information with respect to executive officers of the Corporation, see Part I, Table I "Executive Officers of the Registrant" included in this report.

Information relating to the identification of the audit committee, audit committee financial expert and director nomination procedures of the registrant is contained under the caption “Information Regarding the Board” of the Corporation’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2010, and is incorporated herein by reference.

Code of Ethics

The information under the caption “Code of Business Conduct and Ethics” of the Corporation’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2010, is incorporated herein by reference.

Section 16(a) Beneficial Ownership Reporting Compliance

The information under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2010, is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information under the captions “Executive Compensation” and “Director Compensation” of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2010, is incorporated herein by reference.

IT EM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information under the captions “Security Ownership” and “Equity Compensation Plan Information” of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2010, is incorporated herein by reference.

IT EM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information under the captions “Information Regarding the Board - Director Independence” and “Review, Approval or Ratification of Transactions with Related Persons” of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2010, is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information under the caption “Fees Incurred for PricewaterhouseCoopers LLP” of the Corporation’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2010, is incorporated herein by reference.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) (1)

Financial Statements

The following consolidated financial statements of the Corporation and its subsidiaries included in the Corporation's 2009 Annual Report to Shareholders are filed as a part of this Report pursuant to Item 8:

		Page

Management Report on Internal Control Over Financial Reporting		46

Report of Independent Registered Public Accounting Firm		47

Consolidated Statements of Income for the Years Ended January 2, 2010, January 3, 2009, and December 29, 2007		48

Consolidated Balance Sheets – January 2, 2010, January 3, 2009, and December 29, 2007		49

Consolidated Statements of Shareholders’ Equity for the Years Ended January 2, 2010, January 3, 2009, and December 29, 2007		50

Consolidated Statements of Cash Flows for the Years Ended January 2, 2010, January 3, 2009, and December 29, 2007		51

Notes to Consolidated Financial Statements		52

Investor Information		81

(2)

Financial Statement Schedules

The following consolidated financial statement schedule of the Corporation and its subsidiaries is attached:

Schedule II

Valuation and Qualifying Accounts for the Years Ended January 2, 2010, January 3, 2009, and December 29, 2007

All other schedules for which provision is made in the applicable accounting regulation of the SEC are not required under the related instructions or are inapplicable and, therefore, have been omitted.

(b)

Exhibits

An exhibit index of all exhibits incorporated by reference into, or filed with, this Report

appears on Page 83. The following exhibits are filed herewith:

Exhibit

(3.1)		Articles of Incorporation of HNI Corporation

(3.2)		By-laws of HNI Corporation

(10.2)		2007 Equity Plan for Non-Employee Directors of HNI Corporation

(10.6)		Form of 2007 Equity Plan for Non-Employee Directors of HNI Corporation Participant Agreement

(10.12)		HNI Corporation Executive Deferred Compensation Plan

(10.15)		HNI Corporation Directors Deferred Compensation Plan

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(10.25)		Form of HNI Corporation Executive Deferred Compensation Plan Deferral Election Agreement

(10.26)		Form of HNI Corporation Directors Deferred Compensation Plan Deferral Election Agreement

(21)		Subsidiaries of the Registrant

(23)		Consent of Independent Registered Public Accounting Firm

(31.1)		Certification of the CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(31.2)		Certification of the CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(32.1)		Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	HNI Corporation


Date: February 26, 2010	By:	/s/ Stan A. Askren
		Stan A. Askren
		Chairman, President and CEO

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Each Director whose signature appears below authorizes and appoints Stan A. Askren as his or her attorney-in-fact to sign and file on his or her behalf any and all amendments and post-effective amendments to this report.

Signature	Title	Date


/s/ Stan A. Askren	Chairman, President and CEO,	February 26, 2010
Stan A. Askren	Principal Executive Officer,
	and Director

/s/ Kurt A. Tjaden	Vice President and Chief Financial	February 26, 2010
Kurt A. Tjaden	Officer, Principal Financial Officer and Principal Accounting Officer


/s/ Mary H. Bell	Director	February 26, 2010
Mary H. Bell


/s/ Miguel M. Calado	Director	February 26, 2010
Miguel M. Calado


/s/ Gary M. Christensen	Director	February 26, 2010
Gary M. Christensen


/s/ Cheryl A. Francis	Director	February 26, 2010
Cheryl A. Francis


/s/ John A. Halbrook	Director	February 26, 2010
John A. Halbrook


/s/ James R. Jenkins	Director	February 26, 2010
James R. Jenkins


/s/ Dennis J. Martin	Director	February 26, 2010
Dennis J. Martin

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Signature	Title	Date



/s/ Larry B. Porcellato	Director	February 26, 2010
Larry B. Porcellato


/s/ Abbie J. Smith	Director	February 26, 2010
Abbie J. Smith


/s/ Brian E. Stern	Director	February 26, 2010
Brian E. Stern


/s/ Ronald V. Waters, III	Director	February 26, 2010
Ronald V. Waters, III

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Management Report on Internal Control Over Financial Reporting

Management of HNI Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. HNI Corporation’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. HNI Corporation’s internal control over financial reporting includes those written policies and procedures that:

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.

Internal control over financial reporting includes the controls themselves, monitoring (including internal auditing practices), and actions taken to correct deficiencies as identified.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of HNI Corporation’s internal control over financial reporting as of January 2, 2010. Management based this assessment on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of HNI Corporation’s internal control over financial reporting and testing of the operational effectiveness of HNI Corporation’s internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee of the Board of Directors.

Based on this assessment, management determined that, as of January 2, 2010, HNI Corporation maintained effective internal control over financial reporting.

Management’s assessment of the effectiveness of HNI Corporation’s internal control over financial reporting as of January 2, 2010 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears herein.

February 26, 2010

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of HNI Corporation:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1), present fairly, in all material respects, the financial position of HNI Corporation and its subsidiaries (the “Corporation”) at January 2, 2010, January 3, 2009, and December 29, 2007, and the results of their operations and their cash flows for each of the three years in the period ended January 2, 2010 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 2, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Corporation's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Management Report on Internal Control Over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Corporation's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

/s/PricewaterhouseCoopers LLP

Chicago, Illinois

February 26, 2010

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HNI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except for per share data)
For the Years	2009			2008		2007
Net sales	$	1,656,289		$	2,477,587	$	2,570,472
Cost of products sold		1,085,508			1,648,975		1,664,697
Gross profit		570,781			828,612		905,775
Selling and administrative expenses		526,346			717,870		702,329
Restructuring related and impairment charges		40,443			25,859		9,788
Operating income		3,992			84,883		193,658
Interest income		415			1,172		1,229
Interest expense		12,080			16,865		18,161
Income (loss) from continuing operations before tax		(7,673	)		69,190		176,726
Income taxes		(1,414	)		23,583		57,280
Income (loss) from continuing operations, less applicable income taxes		(6,259	)		45,607		119,446
Discontinued operations, less applicable income taxes		-			-		514
Net income (loss)		(6,259	)		45,607		119,960
Less: Net income attributable to the noncontrolling interest		183			157		(418	)
Net income (loss) attributable to Parent Company	$	(6,442	)	$	45,450	$	120,378
Income (loss) from continuing operations attributable to Parent Company per common share – basic	$	(0.14	)	$	1.03	$	2.57
Discontinued operations attributable to Parent Company per common share – basic		-			-		0.01
Net income (loss) attributable to Parent Company per common share – basic	$	(0.14	)	$	1.03	$	2.58
Weighted average shares outstanding – basic		44,888,809			44,309,765		46,684,774
Net income (loss) attributable to Parent Company per common share – diluted	$	(0.14	)	$	1.02	$	2.55
Discontinued operations attributable to Parent Company per common share – diluted		-			-		0.02
Net income (loss) attributable to Parent Company per common share – diluted	$	(0.14	)	$	1.02	$	2.57
Weighted average shares outstanding - diluted		44,888,809			44,433,945		46,925,161

The accompanying notes are an integral part of the consolidated financial statements.

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HNI CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of dollars and shares except par value)

As of Year-end	2009			2008			2007
Assets
Current Assets
Cash and cash equivalents	$	87,374		$	39,538		$	33,881
Short-term investments		5,994			9,750			9,900
Receivables, net		163,732			238,327			288,777
Inventories		65,144			84,290			108,541
Deferred income taxes		20,299			16,313			17,828
Prepaid expenses and other current assets		17,728			29,623			30,145
Total Current Assets		360,271			417,841			489,072
Property, Plant, and Equipment		260,102			315,606			305,431
Goodwill		261,114			268,392			256,834
Other Assets		112,839			163,790			155,639
Total Assets	$	994,326		$	1,165,629		$	1,206,976
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable and accrued expenses	$	299,718		$	313,431		$	367,320
Note payable and current maturities of long-term debt and capital lease obligations		39			54,494			14,715
Current maturities of other long-term obligations		385			5,700			2,426
Total Current Liabilities		300,142			373,625			384,461
Long-Term Debt		200,000			267,300			280,315
Capital Lease Obligations		-			43			776
Other Long-Term Liabilities		50,332			50,399			55,843
Deferred Income Taxes		24,227			25,271			26,672
Commitments and Contingencies
Shareholders’ Equity
Preferred stock - $1 par value		-			-			-
Authorized: 2,000
Issued: None
Common stock - $1 par value		45,093			44,324			44,835
Authorized: 200,000
Issued and outstanding: 2009-45,093; 2008-44,324; 2007-44,835
Additional paid-in capital		19,695			6,037			3,152
Retained Earnings		355,270			400,379			410,075
Accumulated other comprehensive income		(774	)		(1,907	)		846
Total Parent Company shareholders’ equity		419,284			448,833			458,908
Noncontrolling interest		341			158			1
Total Equity		419,625			448,991			458,909
Total Liabilities and Equity	$	994,326		$	1,165,629		$	1,206,976

The accompanying notes are an integral part of the consolidated financial statements.

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HNI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

	Parent Company Shareholders’ Equity
(Amounts in thousands)	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Non- controlling Interest			Total Shareholders’ Equity
Balance, December 30, 2006	$	47,906		$	2,807			448,268		$	(3,062	)	$	500		$	496,419
Comprehensive income:
Net income								120,378						(418	)		119,960
Other comprehensive income											3,908						3,908
Comprehensive income																	123,868

Adoption of FIN 48 impact								(509	)								(509	)

Change in ownership of noncontrolling interest														(81	)		(81	)

Cash dividends; $0.78 per share								(36,408	)								(36,408	)
Common shares – treasury:
Shares purchased		(3,582	)		(22,439	)		(121,654	)								(147,675	)
Shares issued under Members’ Stock Purchase Plan and stock awards		511			22,784												23,295
Balance, December 29, 2007	$	44,835		$	3,152		$	410,075		$	846		$	1		$	458,909
Comprehensive income:
Net income								45,450						157			45,607
Other comprehensive income											(2,753	)					(2,753	)
Comprehensive income																	42,854

Cash dividends; $0.86 per share								(38,095	)								(38,095	)
Common shares – treasury:
Shares purchased		(1,005	)		(10,497	)		(17,051	)								(28,553	)
Shares issued under Members’ Stock Purchase Plan and stock awards		494			13,382												13,876
Balance, January 3, 2009	$	44,324		$	6,037		$	400,379		$	(1,907	)	$	158		$	448,991
Comprehensive income:
Net income (loss)								(6,442	)					183			(6,259	)
Other comprehensive income											1,133						1,133
Comprehensive income (loss)																	(5,126	)

Cash dividends; $0.86 per share								(38,667	)								(38,667	)
Common shares – treasury:
Shares purchased
Shares issued under Members’ Stock Purchase Plan and stock awards		769			13,658												14,426
Balance, January 2, 2010	$	45,093		$	19,695		$	355,270		$	(774	)	$	341		$	419,625

The accompanying notes are an integral part of the consolidated financial statements.

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HNI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

For the Years	2009			2008			2007
Net Cash Flows From (To) Operating Activities:
Net income (loss)	$	(6,259	)	$	45,607		$	119,960
Noncash items included in net income:
Depreciation and amortization		74,867			70,155			68,173
Other postretirement and post-employment benefits		1,849			1,509			2,132
Stock-based compensation		3,830			1,616			3,603
Excess tax benefits from stock compensation		(8	)		(11	)		(808	)
Deferred income taxes		(5,844	)		2,600			(4,935	)
Net loss on sales, retirements and impairments of long-lived assets and intangibles		26,025			22,691			1,662
Stock issued to retirement plan		6,565			6,592			6,611
Other – net		2,338			(4,065	)		(744	)
Changes in working capital, excluding acquisition and disposition:
Receivables		74,593			58,570			39,941
Inventories		19,146			31,842			20,380
Prepaid expenses and other current assets		9,317			306			2,264
Accounts payable and accrued expenses		(14,313	)		(59,145	)		30,944
Income taxes		8,514			(1,255	)		1,169
Increase (decrease) in other liabilities		(7,415	)		(2,643	)		835
Net cash flows from (to) operating activities		193,205			174,369			291,187
Net Cash Flows From (To) Investing Activities:
Capital expenditures		(16,017	)		(70,083	)		(58,568	)
Proceeds from sale of property, plant and equipment		6,733			6,191			12,145
Capitalized software		(1,537	)		(1,413	)		(346	)
Acquisition spending, net of cash acquired		(500	)		(75,479	)		(41,696	)
Short-term investments – net		-			(250	)		-
Purchase of long-term investments		(9,710	)		(10,650	)		(24,427	)
Sales or maturities of long-term investments		33,872			20,158			20,576
Other – net		440			-			294
Net cash flows from (to) investing activities		13,281			(131,526	)		(92,022	)
Net Cash Flows From (To) Financing Activities:
Purchase of HNI Corporation common stock		-			(28,553	)		(147,675	)
Proceeds from long-term debt		97,000			359,500			289,503
Payments of note and long-term debt and other financing		(219,884	)		(334,200	)		(309,297	)
Proceeds from sale of HNI Corporation common stock		2,893			4,151			9,708
Excess tax benefits from stock compensation		8			11			808
Dividends paid		(38,667	)		(38,095	)		(36,408	)
Net cash flows from (to) financing activities		(158,650	)		(37,186	)		(193,361	)
Net increase (decrease) in cash and cash equivalents		47,836			5,657			5,804
Cash and cash equivalents at beginning of year		39,538			33,881			28,077
Cash and cash equivalents at end of year	$	87,374		$	39,538		$	33,881
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest	$	12,316		$	17,160		$	18,213
Income taxes	$	(4,528	)	$	22,852		$	57,128

The accompanying notes are an integral part of the consolidated financial statements.

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HNI CORPORATION and subsidiaries

Notes to Consolidated Financial Statements

Nature of Operations

HNI Corporation with its subsidiaries (the “Corporation”), is a provider of office furniture and hearth products. Both industries are reportable segments; however, the Corporation’s office furniture business is its principal line of business. Refer to Operating Segment Information for further information. Office furniture products are sold through a national system of dealers, wholesalers, retail superstores, and directly to end-user customers, and federal and state governments. Dealers and wholesalers are the major channels based on sales. Hearth products include a full array of gas, electric, and wood burning fireplaces, inserts, stoves, facings, and accessories. These products are sold through a national system of dealers and distributors, as well as Corporation-owned distribution and retail outlets. The Corporation’s products are marketed predominantly in the United States and Canada. The Corporation exports select products to a limited number of markets outside North America, principally Latin America and the Caribbean, through its export subsidiary and manufactures and markets office furniture in Asia; however, based on sales, these activities are not significant.

Summary of Significant Accounting Policies

Principles of Consolidation and Fiscal Year-End

The consolidated financial statements include the accounts and transactions of the Corporation and its subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

The Corporation follows a 52/53 week fiscal year which ends on the Saturday nearest December 31. Fiscal year 2009 ended on January 2, 2010, 2008 ended on January 3, 2009; and 2007 ended on December 29, 2007. The financial statements for fiscal year 2009 are on a 52-week basis; fiscal 2008 are on a 53-week basis; and fiscal 2007 52-week basis. A 53-week year occurs approximately every sixth year.

Cash, Cash Equivalents and Investments

Cash and cash equivalents generally consist of cash and money market accounts. These securities have original maturity dates not exceeding three months from date of purchase. The Corporation has short-term investments with maturities of less than one year and also has investments with maturities greater than one year that are included in Other Assets on the Consolidated Balance Sheet. Management classifies investments in marketable securities at the time of purchase and reevaluates such classification at each balance sheet date. Equity securities are classified as available-for-sale and are stated at current market value with unrealized gains and losses included as a separate component of equity, net of any related tax effect. The Corporation recognized $1.5 million of other than temporary impairments on these investments during 2008 due to the length of time and extent of which the market value was below cost and current financial conditions. These investments were sold in 2009 resulting in a loss of $0.2 million. Debt securities are normally classified as held-to-maturity and are stated at amortized cost. Certain debt securities were reclassified to trading securities at the end of 2008 due to the Corporation’s intentions to sell. A loss of $41,000 was recognized on these securities. These debt securities were sold in 2009 resulting in a gain of $59,000. The specific identification method is used to determine realized gains and losses on the trade date. The Corporation has invested in an investment fund in which the Corporation’s ownership in this investment fund is such that the underlying investments are recorded at fair market value through the income statement.

At January 2, 2010, January 3, 2009, and December 29, 2007, cash, cash equivalents and investments consisted of the following:

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Year-End 2009 (In thousands)	Cash and cash equivalents		Short-term investments		Long-term investments
Held-to-maturity securities
Certificates of deposit	$	-	$	250	$	-
Investment in target fund		-		5,744		-
Cash and money market accounts		87,374		-		-
Total	$	87,374	$	5,994	$	-

Year-End 2008 (In thousands)	Cash and cash equivalents		Short-term investments		Long-term investments
Trading securities
Debt securities	$	-	$	-	$	1,541
Held-to-maturity securities
Certificates of deposit		-		-		250
Debt securities		-		-		181
Available for sale securities
Equity securities		-		-		1,974
Investment in target fund		-		9,750		15,297
Cash and money market accounts		39,538
Total	$	39,538	$	9,750	$	19,243

Year-End 2007 (In thousands)	Cash and cash equivalents		Short-term investments		Long-term investments
Held-to-maturity securities
Debt securities	$	-	$	-	$	1,858
Available for sale securities
Equity securities		-		-		3,138
Investment in target fund		-		9,900		25,705
Cash and money market accounts		33,881		-		-
Total	$	33,881	$	9,900	$	30,701

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Receivables

Accounts receivable are presented net of an allowance for doubtful accounts of $6.4 million, $8.8 million, and $11.5 million, for 2009, 2008, and 2007, respectively. The allowance is developed based on several factors including overall customer credit quality, historical write-off experience, and specific account analyses that project the ultimate collectibility of the account. As such, these factors may change over time causing the reserve level to adjust accordingly.

Inventories

The Corporation valued 82%, 83%, and 87% of its inventory by the last-in, first-out (“LIFO”) method at January 2, 2010, January 3, 2009, and December 29, 2007, respectively. During 2009 and 2008, inventory quantities were reduced. This reduction resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of current year purchases, the effect of which decreased cost of goods sold by approximately $2.4 million and $3.7 million in 2009 and 2008, respectively. Additionally, the Corporation evaluates its inventory reserves in terms of excess and obsolete exposures. This evaluation includes such factors as anticipated usage, inventory turnover, inventory levels, and ultimate product sales value. As such, these factors may change over time causing the reserve level to adjust accordingly. The reserves for excess and obsolete inventory were $8.2 million, $7.8 million, and $9.1 million, at year-end 2009, 2008, and 2007, respectively.

Property, Plant and Equipment

Property, plant and equipment are carried at cost. Depreciation has been computed using the straight-line method over estimated useful lives: land improvements, 10 – 20 years; buildings, 10 – 40 years; and machinery and equipment, 3 – 12 years.

Long-Lived Assets

Long-lived assets are reviewed for impairment as events or changes in circumstances occur indicating the amount of the asset reflected in the Corporation’s balance sheet may not be recoverable. An estimate of undiscounted cash flows produced by the asset, or the appropriate group of assets, is compared to the carrying value to determine whether impairment exists. The estimates of future cash flows involve considerable management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions. Asset impairment charges recorded in connection with the Corporation’s restructuring activities are discussed in Restructuring Related Charges. These assets included real estate, manufacturing equipment and certain other fixed assets. The Corporation’s continuous focus on improving the manufacturing process tends to increase the likelihood of assets being replaced; therefore, the Corporation is regularly evaluating the expected lives of its equipment and accelerating depreciation where appropriate.

Goodwill and Other Intangible Assets

The Corporation also determines the fair value of indefinite-lived trade names on an annual basis or whenever indications of impairment exist. The Corporation estimates the fair value of the trade names based on a discounted cash flow model using inputs which include projected revenues from management’s long term plan, assumed royalty rates that could be payable if the trade names were not owned and a discount rate. Determining the fair value of a trade name involves the use of significant estimates and assumptions. Actual results may differ from those estimates.

The Corporation has definite-lived intangibles that are amortized over their estimated useful lives. Impairment losses are recognized if the carrying amount of an intangible, subject to amortization, is not recoverable from expected future cash flows and its carrying amount exceeds its fair value. Intangibles, net of amortization, of approximately $67 million are included on the consolidated balance sheet as of the end of fiscal 2009.

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See Goodwill and Other Intangible Assets footnote for further information.

Product Warranties

The Corporation issues certain warranty policies on its furniture and hearth products that provides for repair or replacement of any covered product or component that fails during normal use because of a defect in design, materials or workmanship. A warranty reserve is determined by recording a specific reserve for known warranty issues and an additional reserve for unknown claims that are expected to be incurred based on historical claims experience. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Activity associated with warranty obligations was as follows:

(In thousands)	2009			2008			2007
Balance at the beginning of the period	$	13,948		$	12,123		$	10,624
Accrual assumed from acquisition		-			250			703
Accruals for warranties issued during the period		13,111			20,008			14,831
Accrual related to pre-existing warranties		(357	)		1,368			600
Settlements made during the period		(14,018	)		(19,801	)		(14,635	)
Balance at the end of the period	$	12,684		$	13,948		$	12,123

Revenue Recognition

Revenue is normally recognized upon shipment of goods to customers. In certain circumstances revenue is not recognized until the goods are received by the customer or upon installation and customer acceptance based on the terms of the sales agreement. Revenue includes freight charged to customers; the related costs are recorded in selling and administrative expense. Rebates, discounts and other marketing program expenses that are directly related to the sale are recorded as a reduction to net sales. Marketing program accruals require the use of management estimates and the consideration of contractual arrangements that are subject to interpretation. Customer sales that achieve or do not achieve certain award levels can affect the amount of such estimates and actual results could differ from these estimates.

Product Development Costs

Product development costs relating to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred. These costs include salaries, contractor fees, building costs, utilities and administrative fees. The amounts charged against income were $21.1 million in 2009, $27.8 million in 2008, and $24.0 million in 2007 and were recorded in Selling and Administrative Expenses on the Consolidated Statements of Income.

Freight Expense

The Corporation records freight expense to customers in Selling and Administrative Expenses on the Consolidated Statements of Income. The amounts recorded were $97.1 million in 2009, $169.2 million in 2008 and $164.1 million in 2007.

Stock-Based Compensation

The Corporation measures the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes cost over the requisite service period. See the Stock-Based Compensation footnote for further information.

Income Taxes

The Corporation uses an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Corporation’s financial statements or tax returns. Deferred income taxes are provided to reflect the differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. The Corporation provides for taxes that may be payable if undistributed earnings of overseas subsidiaries were to be remitted to the United States, except for those earnings it considers to be permanently reinvested. There were approximately $12.4 million of accumulated earnings considered to be permanently reinvested as of January 2, 2010. See the Income Tax footnote for further information.

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Earnings Per Share

Basic earnings per share are based on the weighted-average number of common shares outstanding during the year. Shares potentially issuable under options and deferred restricted stock have been considered outstanding for purposes of the diluted earnings per share calculation.

The following table reconciles the numerators and denominators used in the calculation of basic and diluted earnings per share (EPS):

(In thousands, except per share data)	2009	2008	2007
Numerators:
Numerators for both basic and diluted EPS net income (loss) attributable to parent company	$ (6,442)	$ 45,450	$120,378
Denominators:
Denominator for basic EPS weighted- average common shares outstanding	44,889	44,310	46,685
Potentially dilutive shares from stock option plans	-	124	240

Denominator for diluted EPS	44,889	44,434	46,925

Earnings per share – basic	$(0.14)	$1.03	$2.58
Earnings per share – diluted	$(0.14)	$1.02	$2.57

None of the outstanding stock options or restricted stock units was included in the computation of diluted EPS at January 2, 2010, as all would be anti-dilutive due to the current period loss.

Certain exercisable and non-exercisable stock options were not included in the computation of diluted EPS for fiscal years 2008 and 2007, because their inclusion would have been anti-dilutive. The number of stock options outstanding, which met this criterion for 2008 was 1,350,886; and for 2007 was 412,916.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The more significant areas requiring the use of management estimates relate to allowance for doubtful accounts, inventory reserves, marketing program accruals, warranty accruals, accruals for self-insured medical claims, workers’ compensation, legal contingencies, general liability and auto insurance claims, valuation of long-lived assets, and useful lives for depreciation and amortization. Actual results could differ from those estimates.

Self-Insurance

The Corporation is partially self-insured for general, auto and product liability, workers’ compensation, and certain employee health benefits. The general, auto, product and workers’ compensation liabilities are managed using a wholly owned insurance captive; the related liabilities are included in the accompanying consolidated financial statements. As of January 2, 2010, these liabilities totaled $27 million. The Corporation’s policy is to accrue amounts in accordance with the actuarially determined liabilities. The actuarial valuations are based on historical information along with certain assumptions about future events. Changes in assumptions for such matters as legal actions, medical cost inflation and magnitude of change in actual experience development could cause these estimates to change in the future.

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Foreign Currency Translations

Foreign currency financial statements of foreign operations where the local currency is the functional currency are translated using exchange rates in effect at period end for assets and liabilities and average exchange rates during the period for results of operations. Related translation adjustments are reported as a component of Shareholders’ Equity. Gains and losses on foreign currency transactions are included in the “Selling and administrative expenses” caption of the Consolidated Statements of Income.

Reclassifications

Prior periods Statements of Income, Balance Sheets, Statements of Shareholders’ Equity and Statements of Cash Flows have been restated in accordance with the new guidance on noncontrolling interest classification requirements. Certain reclassifications have been made within the footnotes to conform to the current year presentation.

Recent Accounting Pronouncements

In February, 2007, the FASB issued guidance which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective was to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Corporation adopted the guidance December 30, 2007, the beginning of fiscal 2008. As the Corporation did not elect to fair value any additional assets or liabilities it did not have a material impact on its financial statements.

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Restructuring Related and Impairment Charges

The Corporation made the decision to consolidate significant production from its hearth product Mount Pleasant, Iowa plant to other existing hearth products manufacturing facilities. Additionally the Corporation will close hearth products distribution centers in Alsip, Illinois and Lake City, Minnesota and transfer operations to its Mount Pleasant facility. The Corporation’s hearth product segment disposed and consolidated several retail and distribution locations during 2009. In connection with these activities, the Corporation recorded $6.7 million of pre-tax charges which included $1.2 million of accelerated depreciation of machinery and equipment recorded in cost of sales, and $5.5 million of severance and facility exit costs which were recorded as restructuring costs in 2009. These included accelerated depreciation of $1.4 million and write-off of goodwill of $0.6 million, which were non-cash transactions.

During 2008, the Corporation completed the shutdown of an office furniture facility in Richmond, Virginia, consolidated production into other manufacturing locations, closed two distribution centers and started up a new distribution center that began in third quarter 2007. In connection with these activities the Corporation recorded $4.4 million of pre-tax charges which included $0.6 million of accelerated deprecation of machinery and equipment recorded in cost of sales and $3.8 million of severance which were recorded as restructuring costs in 2007. The Corporation incurred $4.2 million of current period charges during 2008 which included $0.4 million of accelerated depreciation of machinery and equipment recorded in cost of sales and $3.8 million of other costs which were recorded as restructuring costs.

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The following table summarizes the restructuring accrual activity since the beginning of fiscal 2007.

(In thousands)	Severance Costs			Facility Termination & Other Costs			Total
Restructuring reserve at December 30, 2006	$	841		$	-		$	841
Restructuring charges		3,539			3,523			7,062
Cash payments		(522	)		(2,533	)		(3,055	)
Restructuring reserve at December 29, 2007	$	3,858		$	990		$	4,848
Restructuring charges		(135	)		4,197			4,062
Cash payments		(3,568	)		(4,963	)		(8,531	)
Restructuring reserve at January 3, 2009	$	155		$	224		$	379
Restructuring charges		8,168			5,166			13,334
Cash Payments		(3,934	)		(3,821	)		(7,755	)
Restructuring reserve At January 2, 2010	$	4,389		$	1,569		$	5,958

The Corporation recorded $25.0 million and $21.8 million of goodwill and trade name impairment charges in 2009 and 2008, respectively, included in the “Restructuring Related and Impairment Charges” line item on the Consolidated Statements of Income, as a result of its annual impairment testing. See Goodwill and Other Intangible Assets footnote for more information.

The Corporation made the decision in 2007 to sell several small non-core components of its office furniture services business and recorded $2.7 million of impairment charges, included in the “Restructuring Related and Impairment Charges” line item on the Consolidated Statements of Income, to reduce the assets being held for sale to fair market value.

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Business Combinations

The Corporation completed the acquisition of HBF, a leading provider of premium upholstered seating, textiles, wood tables and wood case goods for the office environment on March 29, 2008 for a purchase price of approximately $75 million. The transaction was funded on March 31, 2008 with the proceeds of the Corporation’s revolving credit facility. The Corporation finalized the allocation of the purchase price during the fourth quarter of 2008. There were approximately $32.7 million of intangible assets other than goodwill associated with this acquisition. Of these acquired intangible assets, $19.8 million was assigned to a trade name that is not subject to amortization. The remaining $12.9 million have estimated useful lives ranging from four to twenty years with amortization recorded based on the projected cash flow associated with the respective intangible assets’ existing relationship. There was approximately $33.0 million of goodwill associated with this acquisition assigned to the office furniture segment. The goodwill is deductible for income tax purposes.

The Corporation completed the acquisition of Harman, a privately held domestic manufacturer of free-standing stoves and fireplace inserts, as well as two small office furniture dealers during 2007. The combined purchase price of these acquisitions less cash acquired totaled $40.9 million. The Corporation finalized the allocation of the purchase price for the Harman Stove Company acquisition in 2008. A reclassification of $4.2 million between goodwill and other intangible assets occurred in 2008 based on the final valuation report for the Harman Stove Company acquisition. There are approximately $5.7 million of intangibles associated with these acquisitions. Of these acquired intangibles, $2.5 million was assigned to trade names that are not subject to amortization. The remaining $3.2 million have estimated useful lives ranging from one to fifteen years with amortization recorded based on the projected cash flow associated with the respective intangible assets’ existing relationships. There is approximately $4.4 million of goodwill associated with these acquisitions of which $3.6 million was assigned to the office furniture segment and $0.8 million was assigned to the hearth products segment. All goodwill is deductible for income tax purposes.

The results of the acquired entities have been included in the Consolidated Financial Statements since the date of acquisition.

Discontinued Operations

During December 2006, the Corporation committed to a plan to sell a small non-core component of its office furniture segment. The sale was completed during the second quarter of 2007. Revenues and expenses associated with this component are presented as discontinued operations for all periods presented. During the fourth quarter 2006 the Corporation recorded a pre-tax charge of approximately $7.1 million to reduce the assets to the fair market value. The charge was mainly due to the writedown of goodwill and other intangibles not deductible for tax purposes.

Summarized financial information for discontinued operations is as follows:

(in thousands)	2009		2008		2007
Discontinued Operations:
Operating income (loss) before tax	$	-	$	-	$	796
Income tax		-		-		282
Net income (loss) from discontinued operations		-		-		514

Impairment Loss on Discontinued Operations:
Impairment loss on discontinued operations before tax		-		-		-
Benefit for income tax		-		-		-
Net impairment loss on discontinued operations		-		-		-
Discontinued operations, net of income tax	$	-	$	-	$	514

Inventories
(In thousands)	2009			2008			2007
Finished products	$	48,198		$	51,807		$	76,804
Materials and work in process		40,322			60,155			52,641
LIFO reserve		(23,376	)		(27,672	)		(20,904	)
	$	65,144		$	84,290		$	108,541

Property, Plant, and Equipment
(In thousands)		2009			2008			2007
Land and land improvements	$	21,815		$	23,753		$	23,805
Buildings		267,596			277,898			268,650
Machinery and equipment		490,287			525,996			501,950
Construction and equipment installation in progress		8,377			21,738			25,858
		788,075			849,385			820,263
Less: accumulated depreciation		527,973			533,779			514,832
	$	260,102		$	315,606		$	305,431

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Goodwill and Other Intangible Assets

The Corporation evaluates its goodwill for impairment on an annual basis during the fourth quarter or whenever indicators of impairment exist. The Corporation estimates the fair value of its reporting units using various valuation techniques, with the primary technique being a discounted cash flow analysis. The Corporation has eleven reporting units within its office furniture and hearth products operating segments, of which seven contained goodwill during the fourth quarter analysis. These reporting units constitute components for which discrete financial information is available and regularly reviewed by segment management. Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. The estimate of fair value of each reporting unit is based on management’s projection of revenues, gross margin, operating costs and cash flows considering historical and estimated future results, general economic and market conditions as well as the impact of planned business and operational strategies. The valuations employ present value techniques to measure fair value and consider market factors. Management believes the assumptions used for the impairment test are consistent with those utilized by a market participant in performing similar valuations of its reporting units. A separate discount rate was utilized for each reporting unit with rates ranging from 11.0% to 12.0%. Management bases its fair value estimates on assumptions they believe to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates. In addition, for reasonableness, the summation of all the reporting units’ fair values is compared to the Corporation’s market capitalization.

As a result of the review performed in the fourth quarter of 2009, the Corporation determined the carrying amount of a reporting unit acquired in the previous year in the office furniture segment exceeded its fair value. Management then compared the carrying value of goodwill to the implied fair value of the goodwill of this reporting unit, and concluded that $7 million of impairment charges needed to be recognized. Goodwill of $24 million remains on the balance sheet of this reporting unit as of January 2, 2010. The Corporation recorded $17 million of impairment charges in 2008. The reporting units impacted included an office furniture services unit, dealer distribution unit, and a recent acquisition with goodwill charges of approximately $10 million, $5 million and $2 million, respectively.

The changes to fair value in the reporting unit that triggered impairment charges in the fourth quarter were primarily attributable to the continued deterioration in market conditions which became apparent in the fourth quarter as management completed its annual strategic planning process and caused management to change its estimates of the timing of market recovery. The Corporation factored these current market conditions and estimates into its projected forecasts of sales, operating income and cash flows of each reporting unit through the course of its strategic planning process completed in the fourth quarter.

The significant estimates and assumptions used in estimating future cash flows of its reporting units are based on management’s view of longer-term broad market trends. Management combines this trend data with estimates of current economic conditions in the U.S., competitor behavior, the mix of products sales, commodity costs, wage rates, the level of manufacturing capacity, and the pricing environment. In addition, estimates of fair value are impacted by estimates of the market participant derived weighted average cost of capital. The Corporation’s cash flow projections in most of its reporting units assumed virtually flat revenue and cash flows in 2010 and that significant recovery would not begin until 2011. As a reasonableness test, management also compared the market capitalization of the Corporation at January 2, 2010 to the aggregate fair value of the reporting units, resulting in an implied control premium of approximately 25 percent. Management believes this implied control premium is reasonable, in light of the synergies across its operating units, lean manufacturing environment and strong position in the markets it serves.

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The Corporation also owns trade names having a net value of $42.1 million as of January 2, 2010, $60.6 million as of January 3, 2009, and $43.5 million as of December 29, 2007. The trade names are deemed to have an indefinite useful life because they are expected to generate cash flow indefinitely. The Corporation determines the fair value of indefinite lived trade names on an annual basis during the fourth quarter or whenever indication of impairment exists. The Corporation performed its fiscal 2009 assessment of indefinite lived trade names during the fourth quarter. The estimate of the fair value of the trade names was based on a discounted cash flow model using inputs which included: projected revenues from management’s long term plan, assumed royalty rates that could be payable if the trade names were not owned and a discount rate. As a result of the review the Corporation determined the carrying value of certain trade names acquired over the past few years in the office furniture segment exceeded their fair value and recorded a $18 million impairment charge. The Corporation recorded a $5 million impairment charge for certain office furniture trade names in 2008.

The table below summarizes amortizable definite-lived intangible assets, which are reflected in Other Assets in the Corporation’s Consolidated Balance Sheets:

(In thousands)	2009		2008		2007
Patents	$	19,325	$	19,325	$	18,780
Customer lists and other		115,451		115,664		101,320
Less: accumulated amortization		68,004		56,098		45,833
Net intangible assets	$	66,772	$	78,891	$	74,267

Amortization expense for definite-lived intangibles for 2009, 2008, and 2007, was $12.1 million, $10.3 million, and $9.2 million, respectively and was recorded in Selling and Administrative Expenses on the Consolidated Statements of Income. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows:

(in millions)		2010				2011				2012				2013				2014
Amortization expense		$	9.0			$	6.8			$	5.9			$	5.4			$	4.8

The occurrence of events such as acquisitions, dispositions, or impairments in the future may result in changes to amounts.

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The changes in the carrying amount of goodwill since December 30, 2006, are as follows by reporting segment:

(In thousands)	Office Furniture			Hearth Products			Total
Balance as of December 30, 2006
Goodwill	$	90,469		$	166,946		$	257,415
Accumulated impairment losses		(5,654	)		-			(5,654	)
		84,815			166,946			251,761
Goodwill acquired during the year		3,510			5,003			8,513
Impairment losses		-			-			-
Goodwill related to the sale of business units		(710	)		(389	)		(1,099	)
Final purchase price allocations/contingent payments from prior year acquisitions		(2,341	)		-			(2,341	)
Balance as of December 29, 2007
Goodwill		90,928			171,560			262,488
Accumulated impairment losses		(5,654	)		-			(5,654	)
		85,274			171,560			256,834
Goodwill acquired during the year		33,020			-			33,020
Impairment losses		(16,955	)		-			(16,955	)
Goodwill related to the sale of business units					(355	)		(355	)
Final purchase price allocations/contingent payments from prior year acquisitions					(4,152	)		(4,152	)
Balance as of January 3, 2009
Goodwill		123,948			167,053			291,001
Accumulated impairment losses		(22,609	)		-			(22,609	)
		101,339			167,053			268,392
Goodwill acquired during the year		-			-			-
Impairment losses		(6,750	)		-			(6,750	)
Goodwill related to the sale of business units		-			(1,028	)		(1,028	)
Final purchase price allocations/contingent payments from prior year acquisitions		-			500			500
Balance as of January 2, 2010
Goodwill		123,948			166,525			290,473
Accumulated impairment losses		(29,359	)		-			(29,359	)
	$	94,589		$	166,525		$	261,114

The goodwill increases relate to acquisitions completed. See the Business Combinations note. The decreases in goodwill in the office furniture segment in 2009 and 2008 were due to the impairment charges described above. The decrease in goodwill in the office furniture segment in 2007 is due to goodwill associated with office services business units held for sale and final purchase price allocations for previous acquisitions. The decreases in the hearth products segment relates to the sale of a few small service and distribution locations and final purchase price allocations for previous acquisitions.

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Accounts Payable and Accrued Expenses
(In thousands)	2009		2008		2007
Trade accounts payable	$	114,448	$	96,820	$	133,293
Compensation		24,978		27,764		30,544
Profit sharing and retirement expense		19,668		26,905		30,441
Marketing expenses		26,391		51,786		61,568
Freight		15,972		11,586		13,980
Other accrued expenses		98,261		98,570		97,494
	$	299,718	$	313,431	$	367,320

Long-Term Debt
(In thousands)	2009		2008		2007
Note payable to bank, revolving credit agreement with interest at a variable rate (2009-0.54 %; 2008-0.79%; 2007-5.46%)	$	50,000	$	107,500	$	128,000
Note payable to bank, with interest at a fixed rate (2008-3.08%; 2007-5.03%)		-		14,294		14,205
Senior notes due in 2016 with interest at a fixed rate of 5.54% per annum.		150,000		150,000		150,000
Note payable to bank, with interest at a variable rate (2008-2.36%)		-		47,500		-
Industrial development revenue bonds, payable 2018 with interest at a variable rate (2008-1.40%; 2007-3.55%)		-		2,300		2,300
Other notes and amounts		-		-		63
Total debt		200,000		321,594		294,568
Less: current portion		-		54,294		14,253
Long-term debt	$	200,000	$	267,300	$	280,315

Aggregate maturities of long-term debt are as follows:
(In thousands)
2010	$	-
2011		50,000
2012		-
2013		-
2014		-
Thereafter	$	150,000

On January 28, 2005, the Corporation replaced a $136 million revolving credit facility entered into on May 10, 2002 with a new revolving credit facility that provided for a maximum borrowing of $150 million subject to increase (to a maximum amount of $300 million) or reduction from time to time according to the terms of the facility. On December 22, 2005, the Corporation increased the facility to the maximum amount of $300 million. Amounts borrowed under the revolving credit facility may be borrowed, repaid, and reborrowed from time to time until January 28, 2011. As of January 2, 2010, $50 million was outstanding under the revolving credit facility and classified as long-term.

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On April 6, 2006, the Corporation refinanced $150 million of borrowings outstanding under the revolving credit facility with 5.54 percent ten-year unsecured Senior Notes due in 2016 issued through the private placement debt market. Interest payments are due semi-annually on April 1 and October 1 of each year and the principal is due in a lump sum in 2016. The Corporation maintained the revolving credit facility with a maximum borrowing of $300 million.

On June 30, 2008, the Corporation entered into a Credit Agreement which allowed for a one-time borrowing of $50 million in the form of a term loan. The Corporation paid off the term loan during 2009.

Certain of the above borrowing arrangements include covenants which limit the assumption of additional debt and lease obligations. The Corporation has been and currently is in compliance with the covenants related to these debt agreements. The fair value of the Corporation’s outstanding variable rate long-term debt obligations at year-end 2009 approximates the carrying value. The fair value of the Corporation’s outstanding fixed rate long-term debt obligations is estimated to be $151 million, slightly above the carrying value of $150 million.

Income Taxes

Significant components of the provision for income taxes including those related to noncontrolling interest and discontinued operations are as follows:

(In thousands)	2009			2008			2007
Current:
Federal	$	5,400		$	18,165		$	53,965
State		(278	)		2,402			6,588
Foreign		780			482			811
Current provision		5,902			21,049			61,364
Deferred:
Federal		(5,065	)		3,265			(3,031	)
State		(2,673	)		222			(353	)
Foreign		422			(954	)		(418	)
Deferred provision		(7,316	)		2,533			(3,802	)
	$	(1,414	)	$	23,582		$	57,562

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The differences between the actual tax expense (benefit) and tax expense (benefit) computed at the statutory U.S. Federal tax rate are explained as follows:

	2009			2008			2007
Federal statutory tax expense (benefit)	$	(2,750	)	$	24,161		$	62,000
State taxes, net of federal tax effect		(1,919	)		1,813			4,049
Credit for increasing research activities		(1,100	)		(1,700	)		(1,600	)
Deduction related to domestic production activities		(316	)		(1,242	)		(2,383	)
Foreign income tax		1,202			543			393
Excludable foreign income		(670	)		(1,096	)		(3,555	)
True-up of deferred tax items		2,137			436			(1,028	)
Basis in subsidiary		4,378			(3,073	)		-
Valuation allowance		(3,073	)		3,073			-
Uncertain tax positions		636			814			911
Other tax credits		(213	)		(400	)		(400	)
Other – net		274			254			(1,107	)
Total income tax expense (benefit)	$	(1,414	)	$	23,583		$	57,280

The Corporation recorded additional deferred tax assets in 2008 for the tax basis in the stock of a subsidiary in excess of the net tax basis of the subsidiary’s assets and liabilities. As a result of managements change in intent of potential disposition of this subsidiary the deferred tax assets and related valuation allowance were reduced.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Corporation’s deferred tax liabilities and assets are as follows:

(In thousands)	2009			2008			2007
Net long-term deferred tax liabilities:
Tax over book depreciation	$	1,334		$	(1,028	)	$	1,614
Compensation		3,221			3,175			4,624
Goodwill		(40,314	)		(42,802	)		(38,559	)
Basis in subsidiary		-			5,314			-
Valuation allowance		-			(1,981	)		-
Other – net		11,532			12,051			5,649
Total net long-term deferred tax liabilities		(24,227	)		(25,271	)		(26,672	)
Net current deferred tax assets:
Allowance for doubtful accounts		2,337			2,601			3,491
Vacation accrual		4,029			3,646			5,302
Inventory differences		3,845			3,878			2,572
Deferred income		(2,798	)		(3,836	)		(4,484	)
Warranty accruals		4,742			5,177			4,234
Valuation allowance		-			(1,092	)		-
Other – net		8,144			5,939			6,713
Total net current deferred tax assets		20,299			16,313			17,828
Net deferred tax (liabilities) assets	$	(3,928	)	$	(8,958	)	$	(8,844	)

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The Corporation adopted new FASB authoritative guidance on accounting for uncertainty in income taxes effective December 31, 2006, the beginning of fiscal 2007. As a result of the adoption, the Corporation recognized a $1.7 million increase in the liability for unrecognized benefits. This increase in liability resulted in a decrease to the December 31, 2006 retained earnings balance in the amount of $0.5 million and a reduction in deferred tax liabilities of $1.2 million.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)	2009			2008			2007
Unrecognized tax benefits, beginning of period	$	3,646		$	2,839		$	3,895
Increases (decreases) in positions taken in a prior period		(71	)		796			49
Decreases in positions taken in a prior period		(500	)		(52	)		(6	)
Increases in positions taken in a current period		651			834			1,018
Decrease due to settlements		(204	)		(391	)		(2,117	)
Decrease due to lapse of statute of limitations		(76	)		(380	)		-
Unrecognized tax benefits, end of period	$	3,446		$	3,646		$	2,839

The amount of unrecognized tax benefits which would impact the Corporation’s effective tax rate, if recognized, was $3.2 million at January 2, 2010, $3.2 million at January 3, 2009 and $2.3 million at December 29, 2007.

The Corporation recognized interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses which is consistent with the recognition of these items in prior reporting. Interest and penalties recognized in the Consolidated Statements of Income amounted to a benefit of $0.1 million. The Corporation had recorded a liability for interest and penalties related to unrecognized tax benefits of $0.4 million, $0.4 million, and $0.4 million as of January 2, 2010, January 3, 2009, and December 29, 2007, respectively.

The Internal Revenue Service (the “IRS”) has completed the examination of all federal income tax returns through 2004 with no issues pending or unresolved. The years 2005 through 2009 remain open for examination by the IRS. The years 2005 through 2009 are currently under examination or remain open to examination by several states.

As of January 2, 2010, it is reasonably possible the amount of unrecognized tax benefits may increase or decrease within the twelve months following the reporting date. These increases or decreases in the unrecognized tax benefits would be due to new positions that may be taken on income tax returns, settlement of tax positions and the closing of statues of limitation. It is not expected that any of the changes will be material individually or in total to the results or financial position of the Corporation.

Derivative Financial Instruments

The Corporation uses derivative financial instruments to reduce its exposure to adverse fluctuations in interest rates. On the date a derivative is entered into, the Corporation designates the derivative as (i) a fair value hedge, (ii) a cash flow hedge, (iii) a hedge of a net investment in a foreign operation or (iv) a risk management instrument not eligible for hedge accounting. The Corporation recognizes all derivatives on its consolidated balance sheet at fair value.

In June 2008, the Corporation entered into an interest rate swap agreement, designated as a cash flow hedge, for purposes of managing its benchmark interest rate fluctuation risk. Under the interest rate swap agreement, the Corporation pays a fixed rate of interest and receives a variable rate of interest equal to the one-month LIBOR as determined on the last day of each monthly settlement period on an aggregated notional principal amount of $50 million. The net amount paid or received upon monthly settlements is recorded as an adjustment to interest expense, while the change in fair value is recorded as a component of accumulated other comprehensive income in the equity section of the Corporation’s Consolidated Balance Sheet. The interest rate swap agreement matures in 2011.

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The aggregate fair market value of the interest rate swap as of January 2, 2010 was a liability of $2.5 million, of which $1.9 million is included in current liabilities and $0.6 million is included in long-term liabilities in the Corporation's Consolidated Balance Sheet as of January 2, 2010. For the year ended January 2, 2010, the Corporation recorded a deferred net loss of $1.1 million in other comprehensive income and reclassified $1.7 million of losses from other comprehensive income to current period earnings as interest expense in its Consolidated Statements of Income.

As of January 2, 2010, $1.2 million of deferred net losses, net of tax, included in equity (“Accumulated other comprehensive income” in the Corporation’s Consolidated Balance Sheets) related to this interest rate swap, are expected to be reclassified to current earnings (“Interest expense” in the Corporation’s Consolidated Statement of Income) over the next twelve months.

Fair Value Measurements of Financial Instruments

For recognition purposes, on a recurring basis the Corporation is required to measure at fair value its marketable securities and its investment in target funds. The marketable securities were comprised of investments in money market funds. The target funds are reported as both current and noncurrent assets based on the portion that is anticipated to be used for current operations. When available the Corporation uses quoted market prices to determine fair value and classify such measurements within Level 1. In some cases where market prices are not available, the Corporation makes use of observable market based inputs to calculate fair value, in which case the measurements are classified within Level 2.

Assets measured at fair value for the year ended January 2, 2010 were as follows:

(in thousands)	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)
Investment in target funds	$	5,744		$	-	$	5,744		$	-
Derivative financial instrument	$	(2,548	)	$	-	$	(2,548	)	$	-

Assets measured at fair value for the Corporation’s fiscal year ended January 3, 2009 were as follows:

(in thousands)	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)
Marketable securities	$	3,696		$	3,696	$	-		$	-
Investment in target funds	$	25,047		$	-	$	25,047		$	-
Derivative financial instrument	$	(3,106	)	$	-	$	(3,106	)	$	-

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Shareholders’ Equity

	2009		2008		2007
Common Stock, $1 Par Value
Authorized		200,000,000		200,000,000		200,000,000
Issued and outstanding		45,093,379		44,324,409		44,834,519
Preferred Stock, $1 Par Value
Authorized		2,000,000		2,000,000		2,000,000
Issued and outstanding				-		-

The Corporation purchased 0; 1,004,700; and 3,581,707 shares of its common stock during 2009, 2008, and 2007, respectively. The par value method of accounting is used for common stock repurchases. The excess of the cost of shares acquired over their par value is allocated to Additional Paid-In Capital with the excess charged to Retained Earnings on the Corporation’s Consolidated Balance Sheet.

The following table reconciles net income to comprehensive income attributable to HNI Corporation:

(in thousands)	2009			2008			2007
Net income (loss)	$	(6,259	)	$	45,607		$	119,960
Other comprehensive income, net of income tax as applicable:
Foreign currency translation adjustments		(94	)		1,355			765
Change in unrealized gains (losses) on marketable securities		134			14			(148	)
Change in pension and postretirement liability		745			(2,184	)		3,291
Change in derivative financial instruments		348			(1,938	)		-
Comprehensive income (loss)		(5,126	)		42,854			123,868
Comprehensive income attributable to noncontrolling interest		183			157			(418	)
Comprehensive income (loss) attributable to HNI Corporation	$	(5,309	)	$	42,697		$	124,286

The following table summarizes the components of accumulated other comprehensive loss and the changes in accumulated other comprehensive loss, net of tax as applicable:

(in thousands)	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Marketable Securities			Pension Postretirement Liability			Derivative Financial Instruments			Accumulated Other Comprehensive Loss
Balance at December 30, 2006	$	1,500		$	-		$	(4,562	)	$	-		$	(3,062	)
Change during year		765			(148	)		3,291			-			3,908
Balance at December 29, 2007		2,265			(148	)		(1,271	)		-			846
Change during year		1,355			14			(2,184	)		(1,938	)		(2,753	)
Balance at January 3, 2009		3,620			(134	)		(3,455	)		(1,938	)		(1,907	)
Change during year		(94	)		134			745			348			1,133
Balance at January 2, 2010	$	3,526		$	-		$	(2,710	)	$	(1,590	)	$	(774	)

In May 2007, the Corporation registered 300,000 shares of its common stock under its 2007 Equity Plan for Non-Employee Directors of HNI Corporation, as amended (the “Director Plan”). This plan permits the Corporation to issue to its non-employee directors options to purchase shares of Corporation common stock, restricted stock of the Corporation and awards of Corporation common stock. The plan also permits non-employee directors to elect to receive all or a portion of their annual retainers and other compensation in the form of shares of Corporation common stock. Upon approval of this plan in May 2007, no awards are granted under the 1997 Equity Plan for Non-Employee Directors of HNI Corporation, but all outstanding awards previously granted under that plan shall remain outstanding in accordance with their terms. During 2009, 2008, and 2007, 39,914; 31,599; and 17,349 shares, respectively, of Corporation common stock were issued under these plans.

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Cash dividends declared and paid per share for each year are:

(In dollars)		2009				2008				2007
Common shares		$	.86			$	.86			$	.78

During 2002, shareholders approved the 2002 Members’ Stock Purchase Plan, as amended January 1, 2007. Under the plan, 800,000 shares of common stock were registered for issuance to participating members. On June 12, 2009 an additional 1,000,000 shares of common stock were registered for issuance to participating members. Beginning on June 30, 2002, rights to purchase stock are granted on a quarterly basis to all members who customarily work 20 hours or more per week and who customarily work for five months or more in any calendar year. The price of the stock purchased under the plan is 85% of the closing price on the exercise date. No member may purchase stock under the plan in an amount which exceeds a maximum fair value of $25,000 in any calendar year. During 2009, 147,723 shares of common stock were issued under the plan at an average price of $13.77. During 2008, 209,061 shares of common stock were issued under the plan at an average price of $17.90. During 2007, 127,436 shares of common stock were issued under the plan at an average price of $33.43. An additional 923,396 shares were available for issuance under the plan at January 2, 2010.

The Corporation has entered into change in control employment agreements with certain corporate officers and other key members. According to the agreements, a change in control occurs when a third person or entity becomes the beneficial owner of 20% or more of the Corporation’s common stock when more than one-third of the Board is composed of persons not recommended by at least three-fourths of the incumbent Board, upon certain business combinations involving the Corporation or upon approval by the Corporation’s shareholders of a complete liquidation or dissolution. Upon a change in control, a key member is deemed to have a two-year employment agreement with the Corporation, and all of his or her benefits vest under the Corporation’s compensation plans. If, at any time within two years of the change in control, his or her employment is terminated by the Corporation for any reason other than cause or disability, or by the key member for good reason, as such terms are defined in the agreement, then the key member is entitled to receive, among other benefits, a severance payment equal to two times (three times for the Corporation’s Chairman, President and CEO) annual salary and the average of the prior two years’ bonuses.

Stock-Based Compensation

Under the Corporation’s 2007 Stock-Based Compensation Plan (the “Plan”), as amended effective May 8, 2007, the Corporation may award options to purchase shares of the Corporation’s common stock and grant other stock awards to executives, managers and key personnel. Upon shareholder approval of the Plan in May 2007, no future awards were granted under the Corporation’s 1995 Stock-Based Compensation Plan, but all outstanding awards previously granted under that plan shall remain outstanding in accordance with their terms. As of January 2, 2010, there were approximately 3.3 million shares available for future issuance under the Plan. The Plan is administered by the Human Resources and Compensation Committee of the Board. Restricted stock awarded under the Plan is expensed ratably over the vesting period of the awards. Stock options awarded to members under the Plan must be at exercise prices equal to or exceeding the fair market value of the Corporation’s common stock on the date of grant. Stock options are generally subject to four-year cliff vesting and must be exercised within 10 years from the date of grant.

As discussed above, the Corporation also has a shareholder approved Members’ Stock Purchase Plan (the “MSP Plan”). The price of the stock purchased under the MSP Plan is 85% of the closing price on the applicable purchase date. During 2009, 147,723 shares of the Corporation’s common stock were issued under the MSP Plan at an average price of $13.77.

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Compensation cost that has been charged against operations for the two plans described above was $3.8 million, $1.6 million, and $3.6 million for the years ended January 2, 2010, January 3, 2009, and December 29, 2007, respectively. The total income tax benefit recognized in the income statement for share-based compensation arrangements was $1.3 million, $0.5 million, and $1.2 million for the years ended January 2, 2010, January 3, 2009, and December 29, 2007, respectively.

The stock compensation expense for the years ended January 2, 2010, January 3, 2009, and December 29, 2007, was estimated on the date of grant using the Black-Scholes option-pricing model that used the following assumptions by grant year:

	Year Ended Jan. 2, 2010			Year Ended Jan. 3, 2009			Year Ended Dec. 29, 2007
Expected term	7 years			7 years			7 years
Expected volatility:
Range used		33.83	%		25.62% - 30.61	%		26.97	%
Weighted-average		33.83	%		26.15	%		26.97	%
Expected dividend yield:
Range used		4.00	%		2.71% - 5.06	%		1.60	%
Weighted-average		4.00	%		3.11	%		1.60	%
Risk-free interest rate:
Range used		3.04	%		3.48% - 4.62	%		4.71	%

Expected volatilities are based on historical volatility as the Corporation does not feel that future volatility over the expected term of the options is likely to differ from the past. The Corporation used a simple-average calculation method based on monthly frequency points for the prior seven years. The Corporation normally uses the current dividend yield as there are no plans to substantially increase or decrease its dividends. For options issued in February, 2009 the Corporation used the average dividend yield over the prior two years due to the large drop in the market at the date of grant resulting in an unsustainable dividend yield. The Corporation elected to continue to use the simplified method to determine the expected term since the awards qualified as “plain vanilla” options. The risk-free interest rate was selected based on yields from U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of the options being valued.

The following table summarizes the changes in outstanding stock options since the beginning of fiscal 2007.

	Number of Shares			Weighted-Average Exercise Price
Outstanding at December 30, 2006		1,173,616		$	35.27
Granted		185,823			48.66
Exercised		(214,000	)		24.86
Forfeited		(102,373	)		46.14
Outstanding at December 29, 2007		1,043,066		$	38.72
Granted		560,786			28.70
Exercised		(19,500	)		21.00
Forfeited or Expired		(119,293	)		38.13
Outstanding at January 3, 2009		1,465,059		$	35.17
Granted		497,734			10.36
Exercised		(41,750	)		18.31
Forfeited or Expired		(65,409	)		31.22
Outstanding at January 2, 2010		1,855,634		$	29.03

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A summary of the Corporation’s nonvested shares as of January 2, 2010 and changes during the year are presented below:

Nonvested Shares	Shares			Weighted-Average Grant-Date Fair Value
Nonvested at January 3, 2009		872,409		$	11.11
Granted		497,734			2.53
Vested		(121,200	)		15.77
Forfeited		(35,009	)		9.59
Nonvested at January 2, 2010		1,213,934		$	7.17

At January 2, 2010, there was $3.0 million of unrecognized compensation cost related to nonvested stock option awards, which the Corporation expects to recognize over a weighted-average period of 1.2 years. Information about stock options that are vested or expected to vest and that are exercisable at January 2, 2010, follows:

Options	Number		Weighted-Average Exercise Price		Weighted-Average Remaining Life in Years		Aggregate Intrinsic Value ($000s)
Vested or expected to vest		1,720,542	$	29.50		6.6		-
Exercisable		670,700	$	34.43		3.6		-

The weighted-average grant-date fair value of options granted was $2.53, $6.64, and $15.67, for 2009, 2008, and 2007, respectively. Other information for the last three years follows:


(In thousands)	Jan. 2, 2010		Jan. 3, 2009		Dec. 29, 2007
Total fair value of shares vested	$	1,911	$	2,358	$	2,261
Total intrinsic value of options exercised		312		222		4,673
Cash received from exercise of stock options		307		410		5,321
Tax benefit realized from exercise of stock options		109		79		1,551

In 2009 the Corporation issued restricted stock units (“RSUs”) to executives, managers and key personnel. The RSUs vest at the end of three years after the grant date. No dividends are accrued on the RSUs. The share-based compensation expense associated with the RSUs is based on the quoted market price of HNI Corporation shares on the date of grant less the discounted present value of dividends not received on the shares and is amortized to expense using the straight-line method from the grant date through the earlier of the vesting date or the estimated retirement eligibility date.

During the year ended January 2, 2010, RSU activity was as follows:

	Number of Shares			Weighted-Average Grant Date Fair Value
Outstanding at January 3, 2009		-
Granted		698,641		$	7.87
Vested		-			-
Forfeited		(17,685	)		7.84
Outstanding at January 2, 2010		680,956		$	7.87

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At January 2, 2010, there was $3.4 million of unrecognized compensation cost related to RSUs which the Corporation expects to recognize over a weighted average period of 1.2 years.

Retirement Benefits

The Corporation has defined contribution profit-sharing plans covering substantially all employees who are not participants in certain defined benefit plans. The Corporation’s annual contribution to the defined contribution plans is based on employee eligible earnings and results of operations and amounted to $20.3 million, $24.5 million, and $28.1 million, in 2009, 2008, and 2007, respectively. A portion of the annual contribution is in the form of common stock of the Corporation. The amount of the stock contribution was $6.6 million in 2009, 2008, and 2007.

The Corporation sponsors defined benefit plans which include a limited number of salaried and hourly members at certain subsidiaries. The Corporation’s funding policy is generally to contribute annually the minimum actuarially computed amount. Net pension costs relating to these plans were $291,000, $0, and $0, in 2009, 2008, and 2007, respectively. The actuarial present value of obligations, less related plan assets at fair value, is not significant.

The Corporation also participates in a multi-employer plan, which provides defined benefits to certain of the Corporation’s union employees. Pension expense for this plan amounted to $217,000, $320,000, and $376,000, in 2009, 2008, and 2007, respectively.

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Postretirement Health Care

Guidance on employers’ accounting for other postretirement plans requires recognition of the overfunded or underfunded status on the balance sheet. Under this guidance, gains and losses, prior services costs and credits and any remaining transition amounts under previous guidance that have not yet been recognized through net periodic benefit cost are recognized in accumulated other comprehensive income (loss), net of tax effects, until they are amortized as a component of net periodic benefit cost. Also, the measurement date – the date at which the benefit obligation and plan assets are measured – is required to be the Corporation’s fiscal year-end.

(In thousands)	2009			2008			2007
Change in benefit obligation
Benefit obligation at beginning of year	$	14,864		$	15,603		$	19,082
Service cost		391			396			480
Interest cost		959			963			1,067
Plan changes		-			-			(584	)
Benefits paid		(823	)		(1,147	)		(1,361	)
Actuarial (gain)/loss		(137	)		(951	)		(3,081	)
Benefit obligation at end of year	$	15,254		$	14,864		$	15,603

Change in plan assets
Fair value at beginning of year	$	-		$	5,819		$	6,693
Actual return on assets		-			(274	)		487
Employer contribution		823			159			-
Transferred out		-			(4,557	)		-
Benefits paid		(823	)		(1,147	)		(1,361	)
Fair value at end of year	$	-		$	-		$	5,819

Funded Status of Plan	$	(15,254	)	$	(14,864	)	$	(9,784	)

Amounts recognized in the Statement of Financial Position consist of:
Current liabilities	$	1,067		$	1,089		$	-
Noncurrent liabilities	$	14,187		$	13,775		$	9,784

Amounts recognized in Accumulated Other Comprehensive Income (before tax) consist of:
Actuarial (gain)/loss	$	(1,720	)	$	(1,592	)	$	(1,273	)
Transition (asset)/obligation		1,639			2,147			2,654
Prior service cost		-			-			-
	$	(81	)	$	555		$	1,381

Change in Accumulated Other Comprehensive Income (before tax):
Amount disclosed at beginning of year	$	555		$	1,381		$	6,118
Actuarial (gain)/loss		(137	)		(319	)		-
Amortization of actuarial gain or loss		9			-			(3,342	)
Amortization of transition amount		(508	)		(507	)		(964	)
Amortization of prior service cost		-			-			(431	)
Amount disclosed at end of year	$	(81	)	$	555		$	1,381

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Estimated Future Benefit Payments (In thousands)
Fiscal 2010		1,067
Fiscal 2011		1,055
Fiscal 2012		1,047
Fiscal 2013		1,046
Fiscal 2014		1,052
Fiscal 2015 – 2019		5,738
Expected Contributions During Fiscal 2010
Total	$	1,067

The discount rates at fiscal year-end 2009, 2008, and 2007, were 5.7%, 6.7%, and 6.4%, respectively. The Corporation payment for these benefits has reached the maximum amounts per the plan; therefore, healthcare trend rates have no impact on the Corporation’s cost. Approximately $4.5 million of assets previously held in a voluntary employee benefit association (VEBA) fund designated to pay retiree healthcare claims were transferred into a VEBA fund designated to pay active healthcare claims during 2008. As such there were no funds designated as plan assets as of end of 2008 and 2009.

Components of Net Periodic Postretirement Benefit Cost (in thousands)	2010
Service cost	$	391
Interest cost		959
Amortization of net (gain)/loss		(9	)
Amortization of unrecognized transition (asset)/obligation		508
Net periodic postretirement benefit cost/(income)	$	1,849

A discount rate of 5.7% was used to determine net periodic benefit cost for 2010. The discount rate is set at the measurement date to reflect the yield of a portfolio of high quality, fixed income debt instruments. There are no plan assets invested.

Leases

The Corporation leases certain warehouse and plant facilities and equipment. Commitments for minimum rentals under non-cancelable leases at the end of 2009 are as follows:

(In thousands)	Capitalized Leases		Operating Leases
2010	$	40	$	31,640
2011		0		26,863
2012		-		13,094
2013		-		6,648
2014		-		5,855
Thereafter		-		13,691
Total minimum lease payments		40	$	97,791
Less: amount representing interest		1
Present value of net minimum lease payments, including current maturities of $39	$	39

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Property, plant and equipment at year-end include the following amounts for capitalized leases:

(In thousands)	2009		2008		2007
Buildings	$	-	$	-	$	3,299
Machinery and equipment		438		869		906
Office equipment		-		-		-
		438		869		4,205
Less: allowances for depreciation		148		126		3,084
	$	290	$	743	$	1,121

The Corporation purchased the leased building and sold it during 2008.

Rent expense for the years 2009, 2008, and 2007, amounted to approximately $39.4 million, $43.2 million, and $35.6 million, respectively. The Corporation has an operating lease for a production facility with annual rentals totaling approximately $401,000 with a corporation in which the minority owner of one of the Corporation’s consolidated subsidiaries is an investor. There was no contingent rent expense under either capitalized and operating leases (generally based on mileage of transportation equipment) for the years 2009, 2008, and 2007.

Guarantees, Commitments and Contingencies

The Corporation utilizes letters of credit in the amount of $18 million to back certain financing instruments, insurance policies and payment obligations. The letters of credit reflect fair value as a condition of their underlying purpose and are subject to fees competitively determined.

The Corporation is involved in various kinds of disputes and legal proceedings that have arisen in the course of its business, including pending litigation, environmental remediation, taxes, and other claims. It is the Corporation’s opinion, after consultation with legal counsel, that additional liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation’s quarterly or annual operating results and cash flows when resolved in a future period.

Significant Customer

One office furniture customer accounted for approximately 9%, 10%, and 11% of consolidated net sales in 2009, 2008, and 2007, respectively.

Operating Segment Information

Management views the Corporation as being in two operating segments: office furniture and hearth products, with the former being the principal segment. The office furniture segment manufactures and markets a broad line of metal and wood commercial and home office furniture which includes storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions and panel systems and other related products. The hearth products segment manufactures and markets a broad line of gas, electric, wood and biomass burning fireplaces, inserts, stoves, facings and accessories, principally for the home.

For purposes of segment reporting, intercompany sales transfers between segments are not material, and operating profit is income before income taxes exclusive of certain unallocated corporate expenses. These unallocated corporate expenses include the net costs of the Corporation’s corporate operations, interest income, and interest expense. Management views interest income and expense as corporate financing costs and not as an operating segment cost. In addition, management applies an effective income tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis. Identifiable assets by segment are those assets applicable to the respective industry segments. Corporate assets consist principally of cash and cash equivalents, short-term investments, long-term investments and corporate office real estate and related equipment.

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No geographic information for revenues from external customers or for long-lived assets is disclosed since the Corporation’s primary market and capital investments are concentrated in the United States.

Reportable segment data reconciled to the consolidated financial statements for the years ended 2009, 2008, and 2007, is as follows for continuing operations:

(In thousands)	2009			2008			2007
Net sales:
Office furniture	$	1,370,197		$	2,054,037		$	2,108,439
Hearth products		286,092			423,550			462,033
	$	1,656,289		$	2,477,587		$	2,570,472
Operating profit:
Office furniture (a)	$	50,376		$	101,447		$	195,274
Hearth products (b)		(17,194	)		11,759			36,444
Total operating profit		33,182			113,206			231,718
Unallocated corporate expenses		(40,855	)		(44,016	)		(53,992	)
Income (loss) before income taxes	$	(7,673	)	$	69,190		$	177,726
Depreciation and amortization expense:
Office furniture	$	52,137		$	50,511		$	49,294
Hearth products		19,041			15,212			14,453
General corporate		3,689			4,432			4,426
	$	74,867		$	70,155		$	68,173
Capital expenditures:
Office furniture	$	13,482		$	59,101		$	47,408
Hearth products		3,484			10,530			8,736
General corporate		588			1,865			2,770
	$	17,554		$	71,496		$	58,914
Identifiable assets:
Office furniture	$	579,187		$	730,348		$	724,447
Hearth products		291,518			326,168			356,273
General corporate		123,621			109,113			126,256
	$	994,326		$	1,165,629		$	1,206,976

(a)

Included in operating profit for the office furniture segment are pretax charges of $34.9, $25.5 million, and $8.7 million, for closing of facilities and impairment charges in 2009, 2008, and 2007, respectively.

(b)

Included in operating profit for the hearth products segment are pretax charges of $5.5, $0.3 million, and $1.1 million for closing facilities in 2009, 2008, and 2007, respectively.

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Summary of Quarterly Results of Operations (Unaudited)

The following table presents certain unaudited quarterly financial information for each of the past 12 quarters. In the opinion of the Corporation’s management, this information has been prepared on the same basis as the consolidated financial statements appearing elsewhere in this report and includes all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial results set forth herein. Results of operations for any previous quarter are not necessarily indicative of results for any future period.

Year-End 2009: (In thousands, except per share data)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	405,666		$	382,990		$	453,956		$	413,677
Cost of products sold		280,931			253,509			287,352			263,716
Gross profit		124,735			129,481			166,604			149,961
Selling and administrative expenses		136,257			124,766			129,897			135,426
Restructuring related charges (income)		5,085			3,878			4,440			27,040
Operating income (loss)		(16,607	)		837			32,267			(12,505	)
Interest income (expense) – net		(3,063	)		(2,924	)		(3,116	)		(2,562	)
Income (loss) from continuing operations before tax		(19,670	)		(2,087	)		29,151			(15,067	)
Income taxes		(7,811	)		(697	)		11,391			(4,297	)
Net income attributable to the noncontrolling interest		27			7			146			3
Net income (loss) attributable to Parent Company	$	(11,886	)	$	( 1,397	)	$	17,614		$	(10,773	)
Net income (loss) per common share – basic	$	(0.27	)	$	(0.03	)	$	0.39		$	(0.24	)
Weighted-average common shares outstanding – basic		44,612			44,895			44,994			45,054
Net income (loss) per common share – diluted	$	(0.27	)	$	(0.03	)	$	0.39		$	(0.24	)
Weighted-average common shares outstanding – diluted		44,612			44,895			45,598			45,054
As a Percentage of Net Sales
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Gross profit		30.7			33.8			36.7			36.3
Selling and administrative expenses		33.6			32.6			28.6			32.7
Restructuring related charges		1.3			1.0			1.0			6.5
Operating income (loss)		(4.1	)		0.2			7.1			(3.0	)
Income taxes		(1.9	)		(0.2	)		2.5			(1.0	)
Net income (loss) attributable to Parent Company		(2.9	)		(0.4	)		3.9			(2.6	)

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Year-End 2008: (In thousands, except per share data)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	563,383		$	613,114		$	663,141		$	637,949
Cost of products sold		379,345			403,671			438,423			427,536
Gross profit		184,038			209,443			224,718			210,413
Selling and administrative expenses		172,555			182,673			189,577			173,065
Restructuring related charges (income)		818			2,029			1,497			21,515
Operating income		10,665			24,741			33,644			15,833
Interest income (expense) – net		(3,414	)		(4,184	)		(4,037	)		(4,058	)
Income from continuing operations before tax		7,251			20,557			29,607			11,775
Income taxes		3,130			7,098			10,101			3,254
Net income attributable to the noncontrolling interest		144			(10	)		17			6
Net income attributable to Parent Company	$	3,977		$	13,469		$	19,489		$	8,515
Net income per common share – basic	$	0.09		$	0.30		$	0.44		$	0.19
Weighted-average common shares outstanding – basic		44,537			44,233			44,213			44,259
Net income per common share – diluted	$	0.09		$	0.30		$	0.44		$	0.19
Weighted-average common shares outstanding – diluted		44,706			44,370			44,340			44,386
As a Percentage of Net Sales
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Gross profit		32.7			34.2			33.9			33.0
Selling and administrative expenses		30.6			29.8			28.6			27.1
Restructuring related charges		0.1			0.3			0.2			3.4
Operating income		1.9			4.0			5.1			2.5
Income taxes		0.6			1.2			1.5			0.5
Net income attributable to Parent Company		0.7			2.2			2.9			1.3

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Year-End 2007: (In thousands, except per share data)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	609,200		$	618,160		$	674,628		$	668,484
Cost of products sold		402,500			402,523			434,385			425,289
Gross profit		206,700			215,637			240,243			243,195
Selling and administrative expenses		170,814			169,559			176,904			185,052
Restructuring related charges (income)		(136	)		728			4,264			4,932
Operating income		36,022			45,350			59,075			53,211
Interest income (expense) – net		(4,036	)		(4,578	)		(4,489	)		(3,829	)
Income from continuing operations before tax		31,986			40,772			54,586			49,382
Income taxes		11,379			14,417			19,377			12,107
Net income attributable to the noncontrolling interest		(44	)		(38	)		(98	)		(238	)
Income from continuing operations		20,651			26,393			35,307			37,513
Discontinued operations, less applicable taxes		30			484			-			-
Net income attributable to Parent Company	$	20,681		$	26,877		$	35,307		$	37,513
Net income from continuing operations – basic	$	.43		$	.56		$	.76		$	.82
Net income from discontinued operations – basic		.00			.01			-			-
Net income per common share – basic	$	.43		$	.57		$	.76		$	.82
Weighted-average common shares outstanding – basic		47,996			46,937			46,256			45,550
Net income from continuing operations – diluted	$	.43		$	.56		$	.76		$	.82
Net income from discontinued operations – diluted		.00			.01			-			-
Net income per common share – diluted	$	.43		$	.57		$	.76		$	.82
Weighted-average common shares outstanding – diluted		48,278			47,199			46,487			45,775
As a Percentage of Net Sales
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Gross profit		33.9			34.9			35.6			36.4
Selling and administrative expenses		28.0			27.4			26.2			27.7
Restructuring related charges		(0.0	)		0.1			0.6			0.7
Operating income		5.9			7.3			8.8			8.0
Income taxes		1.9			2.3			2.9			1.8
Income from continuing operations		3.4			4.3			5.2			5.6
Discontinued operations, less applicable taxes		0.0			0.1			-			-
Net income attributable to Parent Company		3.4			4.3			5.2			5.6

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INVESTOR INFORMATION

Common Stock Market Prices and Dividends (Unaudited)

Quarterly 2009 – 2007

2009 by Quarter	High		Low		Dividends per Share
1 st	$	17.29	$	7.70	$	.215
2 nd		19.00		11.00		.215
3 rd		24.26		15.85		.215
4 th		29.40		21.94		.215
Total Dividends Paid					$	.86

2008 by Quarter	High		Low		Dividends per Share
1 st	$	37.97	$	26.64	$	.215
2 nd		28.37		18.07		.215
3 rd		34.37		16.71		.215
4 th		25.76		9.09		.215
Total Dividends Paid					$	.86

2007 by Quarter	High		Low		Dividends per Share
1 st	$	51.65	$	43.95	$	.195
2 nd		47.94		40.14		.195
3 rd		45.35		35.56		.195
4 th		44.32		33.79		.195
Total Dividends Paid					$	.78

Common Stock Market Price and Price/Earnings Ratio (Unaudited)

Fiscal Years 2009 – 2005

	Market Price				Diluted Earnings per Share			Price/Earnings Ratio
Year	High		Low		Diluted Earnings per Share			High			Low
2009	$	29.40	$	7.70	$	(0.14	)		(210	)		(55	)
2008		37.97		9.09		1.02			37			9
2007		51.65		33.79		2.57			20			13
2006		61.68		38.34		2.45			25			16
2005		62.41		38.80		2.50			25			16
Five-Year Average									(21	)		(0	)

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SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

HNI CORPORATION AND SUBSIDIARIES

January 2, 2010

COL. A	COL. B		COL. C					COL. D			COL. E
			ADDITIONS
DESCRIPTION	BALANCE AT BEGINNING OF PERIOD		(1) CHARGED TO COSTS AND EXPENSES			(2) CHARGED TO OTHER ACCOUNTS (DESCRIBE)		DEDUCTIONS (DESCRIBE)			BALANCE AT END OF PERIOD
(In thousands)

Year ended January 2, 2010:
Allowance for doubtful accounts	$	8,788	$	2,511			-	$	4,889	(A)	$	6,410
Valuation allowance for deferred tax asset		3,073		(3,073	)		-		-			-

Year ended January 3, 2009:
Allowance for doubtful accounts	$	11,458	$	3,107			-	$	5,777	(A)	$	8,788
Valuation allowance for deferred tax asset		-	$	3,073			-		-		$	3,073

Year ended December 29, 2007:
Allowance for doubtful accounts	$	12,796	$	3,906			-	$	5,244	(A)	$	11,458

Note A: Excess of accounts written off over recoveries.

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ITEM 15(c) - INDEX OF EXHIBITS

Exhibit Number		Description of Document

(3.1)		Articles of Incorporation of HNI Corporation, as amended +

(3.2)		By-laws of HNI Corporation, as amended +

(10.1)		HNI Corporation 2007 Stock-Based Compensation Plan, as amended, incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended April 4, 2009*

(10.2)		2007 Equity Plan for Non-Employee Directors of HNI Corporation, as amended* +

(10.3)		Form of HNI Corporation Change In Control Employment Agreement, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 16, 2006*

(10.4)		HNI Corporation ERISA Supplemental Retirement Plan, as amended effective January 1, 2005, incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 29, 2007*

(10.5)		Form of HNI Corporation Amended and Restated Indemnity Agreement, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 14, 2007*

(10.6)		Form of 2007 Equity Plan For Non-Employee Directors of HNI Corporation Participation Agreement* +

(10.7)		Form of HNI Corporation 2007 Stock-Based Compensation Plan Stock Option Award Agreement, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 4, 2009*

(10.8)		Credit Agreement dated as of January 28, 2005, by and among HNI Corporation, as Borrower, certain domestic subsidiaries of the Borrower from time to time party thereto, as Guarantors, the lenders parties thereto and Wachovia Bank, National Association, as Administrative Agent, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed February 2, 2005

(10.9)		Description of Material Compensatory Arrangements Contained in Offer Letter between HNI Corporation and Kurt Tjaden, incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2008*

(10.10)		HNI Corporation Long-Term Performance Plan, as amended effective January 1, 2005, incorporated by reference to Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 29, 2007*

-83-

Table of Contents

Exhibit Number		Description of Document

(10.11)		First Amendment to Credit Agreement dated as of December 22, 2005, by and among HNI Corporation, as Borrower, certain domestic subsidiaries of the Borrower from time to time party thereto, as Guarantors, the lenders parties thereto and Wachovia Bank, National Association, as Administrative Agent, incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed February 17, 2006

(10.12)		HNI Corporation Executive Deferred Compensation Plan, as amended* +

(10.13)		Second Amendment to Credit Agreement dated as of April 6, 2006, by and among HNI Corporation as Borrower, certain domestic subsidiaries of the Borrower from time to time party thereto, as Guarantors, the lenders parties thereto and Wachovia Bank, National Association, as Administrative Agent, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed April 10, 2006

(10.14)		Note Purchase Agreement dated as of April 6, 2006, by and among HNI Corporation and the Purchasers named therein, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed April 10, 2006

(10.15)		HNI Corporation Directors Deferred Compensation Plan, as amended* +

(10.16)		Third Amendment to Credit Agreement dated as of November 8, 2006, by and among HNI Corporation as Borrower, certain domestic subsidiaries of the Borrower from time to time party thereto, as Guarantors, the lenders parties thereto and Wachovia Bank, National Association, as Administrative Agent, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 8, 2006

(10.17)		HNI Corporation Executive Bonus Plan as amended effective January 1, 2005, incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 29, 2007*

(10.18)		Form of HNI Corporation Amendment No. 1 to Change in Control Employment Agreement incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed August 10, 2007*

(10.19)		HNI Corporation Stock-Based Compensation Plan, as amended effective August 8, 2006, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006*

(10.20)		Form of Exercise of Stock Option granted under the HNI Corporation Stock-Based Compensation Plan, incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2008*

(10.21)		Form of HNI Corporation Stock-Based Compensation Plan Stock Option Award Agreement, incorporated by reference to Exhibit 99D to the Registrant’s Current Report on Form 8-K filed February 22, 2005*

-84-

Table of Contents

Exhibit Number		Description of Document

(10.22)		Fourth Amendment to Credit Agreement dated as of June 20, 2008, by and among HNI Corporation as Borrower, certain domestic subsidiaries of the Borrower from time to time party thereto as Guarantors, the lenders parties thereto and Wachovia Bank, National Association, as Administrative Agent, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed July 7, 2008

(10.23)		Credit Agreement dated as of June 30, 2008, by and among HNI Corporation, as Borrower, certain domestic subsidiaries of HNI Corporation from time to time party thereto, as Guarantors, certain lenders party thereto and Wachovia Bank, National Association, as Administrative Agent, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed July 7, 2008

(10.24)		Form of HNI Corporation 2007 Stock-Based Compensation Plan Restricted Stock Unit Award Agreement, incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 4, 2009*

(10.25)		Form of HNI Corporation Executive Deferred Compensation Plan Deferral Election Agreement* +

(10.26)		Form of HNI Corporation Directors Deferred Compensation Plan Deferral Election Agreement* +

(21)		Subsidiaries of the Registrant +

(23)		Consent of Independent Registered Public Accounting Firm +

(31.1)		Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 +

(31.2)		Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 +

(32.1)		Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 +

* Indicates management contract or compensatory plan.

+ Filed herewith.

-85-

Exhibit 3.1

ARTICLES OF INCORPORATION

HNI CORPORATION

Amended and restated on May 5, 1987.

Amended on May 3, 1988, July 7, 1988, May 12, 1998, August 10, 1998,

May 11, 1999, May 5, 2003, May 4, 2004, May 8, 2007 and November 30, 2009

ARTICLE 1.

Section 1.01. Name. The name of the Corporation is HNI Corporation. (As amended 5/04/04.)

Section 1.02. Law Under Which Incorporated. The Corporation was incorporated under Chapter 384 of the Code of Iowa (1939), and has voluntarily adopted the provisions of the Iowa Business Corporation Act, Chapter 496A of the Code of Iowa.

ARTICLE 2.

Section 2.01. Duration. The Corporation shall have perpetual duration.

ARTICLE 3.

Section 3.01. Purposes and Powers. The Corporation shall have unlimited power to engage in, and to do any lawful act concerning, any or all lawful businesses for which corporations may be organized under the Iowa Business Corporation Act.

ARTICLE 4.

Section 4.01. Authorized Shares. The aggregate number of shares which the Corporation shall have the authority to issue is 202,000,000 shares, consisting of 2,000,000 shares designated as "preferred shares" or "preferred stock," with a par value of $1.00 per share, and 200,000,000 shares designated as "common stock" or "common shares," with a par value of $1.00 per share. (Amended 5/12/98 and 5/11/99.)

Section 4.02. Series of Preferred Shares. Authority is hereby vested in the Board of Directors to divide the preferred shares into series and, within the limitations set forth in the Iowa Business Corporation Act and in these Articles of Incorporation, to fix and determine the relative rights and preferences of the shares of any series so established. In order to establish such series, the Board of Directors and the Corporation shall comply with the procedure therefor as provided in the Iowa Business Corporation Act. Upon such compliance, the resolution of the Board of Directors establishing and designating the series and fixing and determining the relative rights and preferences thereof shall become effective and shall constitute an amendment of these Articles of Incorporation.

Section 4.03. Relative Rights and Preferences of Each Series. All preferred shares shall be identical, except as to the relative rights and preferences as to which the Iowa Business Corporation Act permits variations between different series.

Section 4.04. Pre-Emptive Rights Denied. No holder of shares of any class shall have any pre-emptive right to acquire, subscribe for, or purchase any shares of any class (whether such shares shall be authorized by these Articles of Incorporation or authorized hereafter), treasury shares, or securities of the Corporation. Any and all pre-emptive rights which might otherwise exist are expressly denied.

Section 4.05. Voting Rights. The preferred shareholders shall have no voting rights, and the vote or consent of the preferred shareholders shall not be required with respect to any matter, except that the preferred shareholders shall have the right to vote on any matter as to which the Iowa Business Corporation Act expressly requires that they be permitted to vote notwithstanding any contrary provisions of the Articles of Incorporation.

Cumulative voting shall not be permitted or be effective at any meeting of shareholders.

ARTICLE 5.

Section 5.01. Directors: Number, Terms, Classification. The number of Directors shall be fixed by the By-laws. The Directors shall be divided into three classes, each of which shall be as nearly equal in number as possible. The term of office of one class shall expire in each year. At each annual meeting of the shareholders, a number of Directors equal to the number of the class whose term expires at the annual meeting shall be elected for a term ending when Directors are elected at the third succeeding annual meeting. (As amended 5/8/07.)

Section 5.02. Limitation of Director's Liability. No Director shall be liable to the Corporation or its shareholders for money damages for any action taken, or any failure to take any action, as a Director, and the Corporation may indemnify a Director as provided in the By-laws for any such liability to the Corporation or its shareholders or any liability to any person for such action or failure to take any action as a Director, except liability for any of the following:

(a) The amount of a financial benefit received by a Director to which the Director is not entitled;

(b) An intentional infliction of harm on the Corporation or the shareholders;

(d) An intentional violation of criminal law.

Nothing in this Section 5.02 shall be construed to eliminate or limit the liability of a Director for an act or omission occurring prior to the date when this Section 5.02 became effective. For purposes of this Section 5.02, the terms "Director" and "liability" shall have the meanings ascribed to such terms in the Iowa Business Corporation Act, as amended from time to time. (As amended 5/8/07.)

ARTICLE 6.

Section 6.01. By-laws. The power to amend the By-laws is vested in the Board of Directors. Wherever used in these Articles of Incorporation with respect to the By-laws, the word "amendment" or "amend" includes and shall apply to the amendment, alteration, or repeal of any or all provisions of the By-laws or the adoption of new By-laws.

Section 6.02. Effect of Articles of Incorporation and By-laws. Each shareholder, by the act of becoming or remaining a shareholder of the Corporation, shall be deemed to have accepted and agreed to all provisions of these Articles of Incorporation and the By-laws, as amended from time to time. All provisions of the By-laws which (or the substance of which) at any time shall have been adopted, approved, or ratified by the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote shall have the same force and effect as if such provisions were included in full in these Articles of Incorporation. No such provision of the By-laws shall be construed as having any lesser force or effect by reason of being included in the By-laws rather than in the Articles of Incorporation. This Section shall not be construed to require that any provision or amendment of the By-laws be adopted, approved, or ratified by the shareholders. Any shareholder, regardless of the period of time during which he has been a shareholder, shall have the right to examine the By-laws of the Corporation in person or by agent or attorney at any reasonable time or times and to make extracts therefrom. Upon the written request of any shareholder, the Corporation shall mail to such shareholder within a reasonable time a copy of the By-laws.

Section 6.03. Amendment of Articles of Incorporation. The Corporation and the shareholders expressly reserve the right from time to time to amend these Articles of Incorporation, in the manner now or hereafter permitted by the Iowa Business Corporation Act or other applicable law, whether or not such amendment shall constitute or result in a fundamental change in the purposes or structure of the Corporation or in the rights or privileges of shareholders or others or in any or all of the foregoing. All rights and privileges of shareholders or others shall be subject to this reservation. Wherever used in these Articles of Incorporation with respect to the Articles of Incorporation, the word "amendment" or "amend" includes and shall apply to the amendment, alteration, or repeal of any or all provisions of the Articles of Incorporation or the adoption of new or restated Articles of Incorporation.

Exhibit 3.2

BY-LAWS

HNI CORPORATION

Adopted on September 7, 1960.

Amended on April 23, 1964, April 28, 1966, August 13, 1969, April 15, 1970,

February 12, 1976, July 23, 1976, January 11, 1977, February 13, 1977, April 18, 1977,

July 28, 1977, July 29, 1977, October 27, 1977, February 27, 1978, February 19, 1979,

August 1, 1979, March 3, 1980, April 30, 1980, October 29, 1980, August 3, 1982,

January 31, 1983, October 31, 1983, October 30, 1984, February 5, 1985, May 6, 1985,

February 4, 1986, August 5, 1986, February 15, 1988, July 7, 1988, March 13, 1990,

February 11, 1991, April 29, 1991, July 29, 1991, May 5, 1992, November 2, 1992,

May 11, 1993, February 14, 1994, May 10, 1994, November 13, 1995, May 14, 1996,

May 12, 1997, March 4, 1998, July 29, 1998, November 10, 2000, November 7, 2002,

February 12, 2003, May 5, 2003, November 7, 2003, February 11, 2004, August 2, 2004,

May 3, 2005, November 11, 2005, November 10, 2006, May 8, 2007, August 7, 2007,

November 7, 2008 and November 19, 2009.

ARTICLE 1. OFFICES AND PLACES OF BUSINESS

Section 1.01. Principal Place of Business. The principal place of business of the Corporation shall be located in such place, within or without the State of Iowa, as shall be fixed by or pursuant to authority granted by the Board of Directors from time to time.

Section 1.02. Registered Office. The registered office of the Corporation required by the Iowa Business Corporation Act to be maintained in the State of Iowa may be, but need not be, the same as its principal place of business. The registered office may be changed from time to time by the Board of Directors as provided by law.

Section 1.03. Other Places. The Corporation may conduct its business, carry on its operations, have offices, carry out any or all of its purposes, and exercise any or all of its powers anywhere in the world, within or without the State of Iowa.

ARTICLE 2. SHAREHOLDERS

Section 2.01. Annual Meeting. The annual meeting of the shareholders shall be held in each year at such time and place as shall be fixed by the Board of Directors or by the Chairman of the Board of Directors; provided, however, that the annual meeting shall not be scheduled on a legal holiday in the state where held. Any previously scheduled annual meeting may be postponed by resolution of the Board of Directors and on public notice given prior to the date previously scheduled for such annual meeting. At the annual meeting, the shareholders shall elect Directors as provided in Section 3.02 and may conduct any other business properly brought before the meeting. (As amended 4/23/64, 8/1/79, 10/31/83, and 4/29/91.)

Section 2.02. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, may be called, and the time and place thereof fixed by the Board of Directors or by the holders of not less than 50 percent of all votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. Business conducted at any special meeting of shareholders shall be limited to the purposes stated in the notice of the meeting. Any previously scheduled special meeting of shareholders may be postponed by resolution of the Board of Directors and public notice given prior to the date previously scheduled for such special meeting of shareholders. (As amended 4/23/64, 8/1/79, 4/29/91 and 11/7/03.)

Section 2.03. Place of Shareholders' Meetings. Any annual meeting or special meeting of shareholders may be held at any place, either within or without the State of Iowa. The place of each meeting of shareholders shall be fixed as provided in these By-laws, or by a waiver or waivers of notice fixing the place of such meeting and signed by all shareholders entitled to vote at such meeting. If no designation is made of the place of a meeting of shareholders, the place of meeting shall be the registered office of the Corporation in the State of Iowa.

Section 2.04. Notice of Shareholders' Meetings. Written or printed notice stating the place, day, and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days (unless a longer period shall be required by law) nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. (As amended 4/29/91.)

Section 2.05. Closing of Transfer Books; Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, seventy days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least fifteen days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days and, in case of a meeting of shareholders, not less than fifteen days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the Board of Directors does not provide that the stock transfer books shall be closed and does not fix a record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the record date for such determination of shareholders shall be seventy days prior to the date fixed for such meeting or seventy days prior to the date of payment of such dividend, as the case may be. When any record date is fixed for any determination of shareholders such determination of shareholders shall be made as of the close of business on the record date. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof. (As amended 4/30/80, 8/3/82 and 4/29/91.)

Section 2.06. Voting List. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten days prior to such meeting shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. Failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting. (As amended 4/29/91.)

Section 2.07. Quorum of Shareholders. Except as otherwise expressly provided by the Articles of Incorporation or these By-laws, a majority of the outstanding common shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders.

Section 2.08. Adjourned Meetings. Any meeting of shareholders may be adjourned from time to time and to any place, without further notice, by the chairman of the meeting or by the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote and represented at the meeting, even if less than a quorum. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. (As amended 4/29/91.)

Section 2.09. Vote Required for Action. The vote required for the adoption of any motion or resolution or the taking of any action at any meeting of shareholders shall be as provided in the Articles of Incorporation. However, action may be taken on the following procedural matters by the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote and represented at the meeting, even if less than a quorum: election or appointment of a Chairman or temporary Secretary of the meeting (if necessary), or adoption of any motion to adjourn or recess the meeting or any proper amendment of any such motion. Whenever the minutes of any meeting of shareholders shall state that any motion or resolution was adopted or that any action was taken at such meeting of shareholders, such minutes shall be prima facie evidence that such motion or resolution was duly adopted or that such action was duly taken by the required vote, and such minutes need not state the number of shares voted for and against such motion, resolution, or action.

Section 2.10. Proxies. At all meetings of shareholders, a shareholder entitled to vote may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Each such proxy shall be filed with the Secretary of the Corporation or the person acting as Secretary of the meeting, before or during the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.

Section 2.11. Shareholders' Voting Rights. Each outstanding share entitled to vote shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders, except as otherwise provided in the Articles of Incorporation. Voting rights for the election of Directors shall be as provided in Section 3.02 and in the Articles of Incorporation. (As amended 2/12/76.)

Section 2.12. Voting of Shares by Certain Holders. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the By-laws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine.

Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed.

A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

Treasury shares shall not be voted at any meeting or counted in determining the total number of outstanding shares at any given time.

Section 2.13. Organization. The Chairman of the Board of Directors or the Lead Director or the President or a Vice-President, as provided in these By-laws, shall preside at each meeting of shareholders; but if the Chairman of the Board of Directors, the Lead Director, the President, and each Vice-President shall be absent or refuse to act, the shareholders may elect or appoint a Chairman to preside at the meeting. The Secretary or an Assistant Secretary, as provided in these By-laws, shall act as Secretary of each meeting of shareholders; but if the Secretary and each Assistant Secretary shall be absent or refuse to act, the shareholders may elect or appoint a temporary Secretary to act as Secretary of the meeting. (As amended 4/23/64, 8/1/79 and 5/3/05.)

Section 2.14. Waiver of Notice by Shareholders. Whenever any notice whatsoever is required to be given to any shareholder of the Corporation under any provision of law or the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether signed before or after the time of the meeting or event of which notice is required, shall be deemed equivalent to the giving of such notice. Neither the business to be conducted at, nor the purpose of, any annual or special meeting of shareholders need be specified in any waiver of notice of such meeting. The attendance of any shareholder, in person or by proxy, at any meeting of shareholders shall constitute a waiver by such shareholder of any notice of such meeting to which such shareholder would otherwise be entitled, and shall constitute consent by such shareholder to the place, day, and hour of such meeting and all business which may be conducted at such meeting, unless such shareholder attends such meeting and objects at such meeting to any business conducted because the meeting is not lawfully called or convened. (As amended 4/29/91.)

Section 2.15. Postponement of Shareholders' Meetings. Any meeting of the shareholders may be postponed prior to the record date by the Board of Directors or by the Chairman. Written or printed notice of the postponement shall be delivered not less than 10 days nor more than 60 days before the date set for the meeting, either personally or by mail to each shareholder of record entitled to vote. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. (As adopted 2/11/91.)

Section 2.16. Notice of Shareholder Business and Nominations.

(a)

Annual Meeting of Shareholders.

(1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this By-law, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this By-law.

(2) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to Subsection 2.16(a)(1)(iii), the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than sixty days nor more than ninety days prior to the first anniversary of the preceding year's annual meeting of shareholders; provided, however, that, if the date of the annual meeting is advanced by more than thirty days or delayed by more than sixty days from such anniversary date, notice by the shareholder, to be timely, must be so delivered not earlier than ninety days prior to such annual meeting and not later than the close of business on the later of the sixtieth day prior to such annual meeting or the tenth day following the date on which public announcement of the date of such meeting is first made. Such shareholder's notice shall set forth:

(i) as to each person whom the shareholder proposes to nominate for election or re-election as a Director, (A) all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected), and (B) a statement whether such person, if elected, intends to tender, promptly following such person's election or re-election and in accordance with Section 3.02 of these By-laws and the Corporation's Corporate Governance Guidelines, an irrevocable resignation that is effective ninety (90) days after the date of the certification of the election results upon such person's failure to receive the required vote for re-election at any future meeting at which such person would face re-election; and (As amended 5/08/07 and 11/7/08.)

(ii) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest of such shareholder in such business and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, the name and address of such shareholder and of such beneficial owner as they appear on the Corporation's books, and the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.

(3) Notwithstanding anything in the second sentence of Subsection 2.16(a)(2) to the contrary, if the number of Directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all the nominees for Director or specifying the size of the increased Board of Directors at least seventy days prior to the first anniversary of the preceding year's annual meeting of shareholders, a shareholder's notice required by this By-law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the date on which such public announcement is first made by the Corporation.

(b) Special Meetings of Shareholders. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which Directors are to be elected pursuant to the Corporation's notice of meeting (1) by or at the direction of the Board of Directors or (2) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this By-law, who is entitled to vote at the meeting, and who complies with the notice procedures set forth in this By-law. Nominations by shareholders of persons for election to the Board of Directors may be made at such a special meeting of shareholders if the shareholder's notice required by Subsection 2.16(a)(2) is delivered to the Secretary at the principal executive offices of the Corporation no earlier than ninety days prior to such special meeting and not later than the close of business on the later of the sixtieth day prior to such special meeting or the tenth day following the date on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

(c) Appointment of Inspectors. The Chairman shall appoint one or more inspectors to act at a meeting of Shareholders and make a written report of the inspectors' determinations. Each inspector shall sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of the inspector's ability. The inspector or inspectors shall: (1) ascertain the number of shares outstanding and the voting power of each, (2) determine the shares represented at the meeting, (3) determine the validity of proxies and ballots, (4) count all votes, and (5) determine the results. (As adopted 2/12/03.)

(d) General.

(1) Only persons who are nominated in accordance with the procedures set forth in this By-law shall be eligible to serve as Directors, and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in these By-laws. Except as otherwise provided by law, the Articles of Incorporation, or the By-laws of the Corporation, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in these By-laws and, if any proposed nomination or business is not in compliance with these By-laws, to declare that such defective proposal or nomination shall be disregarded. (As adopted 2/12/03).

(2) The Chairman shall determine the order of business for the meeting and shall have the authority to establish rules for the conduct of the meeting. Such rules and the conduct of any meeting of shareholders shall be fair to the shareholders. When elections are conducted at the meeting, the Chairman shall announce the meeting when the polls close for each matter upon which a vote is taken; if no such announcement is made, the polls will be deemed to have closed at the final adjournment of the meeting. No ballots, proxies, votes or revocations or changes to any ballots, proxies or votes will be accepted after the polls have closed. (As adopted 2/12/03.)

(3) For purposes of this By-law, "public announcement" means disclosure in a press release reported by the Dow Jones News Service, Associated Press, or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act.

(4) Notwithstanding the foregoing provisions of this By-law, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-law. Nothing in this By-law shall be deemed to affect any rights of shareholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. (As adopted 4/19/91.)

ARTICLE 3. BOARD OF DIRECTORS

Section 3.01. General Powers. The business and affairs of the Corporation shall be managed by its Board of Directors. The Board of Directors may exercise all such powers of the Corporation and may do all such lawful acts and things as are not by law or the Articles of Incorporation or these By-laws expressly required to be exercised or done by the shareholders.

Section 3.02. Election of Directors.

(a) Subject to the Articles of Incorporation, the common shareholders shall elect one class of Directors at each annual meeting of shareholders. At each election of Directors, each common shareholder entitled to vote shall have the right to vote, in person or by proxy, the number of common shares owned by him and entitled to vote, for as many persons as the number of the class to be elected. Cumulative voting shall not be permitted. The election of Directors may be conducted by written ballot, but need not be conducted by written ballot unless required by a rule or motion adopted by the shareholders. (As amended 2/12/76 and 5/08/07.)

(b) In an Uncontested Election, a nominee for Director who receives a greater number of votes "AGAINST" his or her election than votes "FOR" such election shall, to the extent permitted by law, resign no later than ninety (90) days after the date of the certification of the election results. "Uncontested Election" shall mean any election of Directors of the Corporation other than a Contested Election. "Contested Election" shall mean any election of Directors of the Corporation in which (i) the Secretary of the Corporation has received a notice that a shareholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for shareholder nominees for Director set forth in Section 2.16 of these By-laws and (ii) such nomination has not been withdrawn by such shareholder on or prior to the day next preceding the date the Corporation first mails its notice of meeting for its meeting of shareholders. (As amended 5/08/07.)

Section 3.03. Number, Terms, Classification, and Qualifications. Subject to the Articles of Incorporation:

(a) The number of Directors shall be twelve. (As amended 10/29/80, 1/31/83, 2/5/85, 8/5/86, 3/13/90, 5/5/92, 11/2/92, 5/11/93, 2/14/94, 5/10/94, 11/13/95, 5/14/96, 3/4/98, 7/29/98, 11/7/02, 2/12/03, 5/05/03, 11/07/03, 8/2/04, 5/3/05, 11/11/05, 11/10/06 and 11/19/09.)

(b) The Directors shall be divided into three classes, each of which shall be as nearly equal in number as possible. The term of office of one class shall expire in each year. At each annual meeting of the shareholders a number of Directors equal to the number of the class whose term expires at the annual meeting shall be elected for a term ending when Directors are elected at the third succeeding annual meeting. Section 5.03 of the Articles of Incorporation shall apply if there is a failure in any one or more years to elect one or more Directors or to elect any class of Directors. (As amended 2/4/86.)

(c) The number of Directors may be increased or decreased from time to time by amendment of this Section, but no decrease shall have the effect of shortening the term of any incumbent Director. Any new Directorships shall be assigned to classes, and any decrease in the number of Directors shall be scheduled, in such a manner that the three classes of Directors shall be as nearly equal in number as possible.

(d) The term of each Director shall begin at the time of his election. Unless sooner removed as provided in the Articles of Incorporation or elected to fill a vacancy with a shorter unexpired term pursuant to Section 3.04, each Director shall serve for a term ending when Directors are elected at the third succeeding annual meeting of shareholders.

However, any Director may resign at any time by delivering his written resignation to the Chairman, Lead Director, President, or Secretary of the Corporation. The resignation shall take effect immediately upon delivery, unless it states a later effective date. (As amended 8/1/79 and 5/3/05.)

(e) Directors need not be residents of the State of Iowa or shareholders of the Corporation. (As amended 4/23/64, 4/15/70, 2/12/76, 7/23/76, 1/11/77, 4/18/77, 7/28/77, 7/29/77, 2/27/78, and 2/4/86.)

Section 3.04. Vacancies in Board. Any vacancy occurring in the Board of Directors for any reason, and any Directorship to be filled by reason of an increase in the number of Directors, may be filled by the affirmative vote of a majority of the Directors then in office even if less than a quorum (notwithstanding Sections 3.09 and 3.11). Except as otherwise provided in Section 5.03 of the Articles of Incorporation, a Director elected as provided in this Section shall be elected for the unexpired term of his predecessor in office or the unexpired term of the class of Directors to which his new Directorship is assigned. However, if a Director is elected to fill a vacancy caused by the resignation of a predecessor whose resignation has not yet become effective, the new Director's term shall begin when his predecessor's resignation becomes effective. (As amended 4/23/64 and 2/12/76.)

Section 3.05. Regular Meetings. A regular meeting of the Board of Directors may be held without notice other than this Section, promptly after and at the same place as each annual meeting of shareholders. Other regular meetings of the Board of Directors may be held at such time and at such places as shall be fixed by (or pursuant to authority granted by) resolution or motion adopted by the Board of Directors from time to time, without notice other than such resolution or motion. However, unless both the time and place of a regular meeting shall be fixed by the Board of Directors, notice of such meeting shall be given as provided in Section 3.08.

Section 3.06. Special Meetings. Special meetings of the Board of Directors may be called, and the time and place thereof fixed, by the Chairman of the Board of Directors or the Lead Director or the President or the Secretary or by a majority of the Directors then in office. (As amended 4/23/64, 8/1/79 and 5/3/05.)

Section 3.07. Place of Meetings. Any regular meeting or special meeting of the Board of Directors may be held at any place, either within or without the State of Iowa. The place of each meeting of the Board of Directors shall be fixed as provided in these By-laws, or by waiver or waivers of notice fixing the place of such meeting and signed by all Directors then in office. If no designation is made of the place of a meeting of the Board of Directors, the place of meeting shall be the registered office of the Corporation in the State of Iowa.

Section 3.08. Notice of Special Meetings. Written or printed notice stating the place, day, and hour of a special meeting of the Board of Directors shall be delivered before the time of the meeting, either personally or by mail or by telegram, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Director at his address as it appears on the records of the Corporation, with postage thereon prepaid. If given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company, addressed to the Director at his address as it appears on the records of the Corporation. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice of such meeting. (As amended 7/7/88.)

Section 3.09. Quorum. Except as otherwise expressly provided by the Articles of Incorporation or these By-laws, a majority of the number of Directors fixed by these By-laws shall constitute a quorum at any meeting of the Board of Directors.

Section 3.10. Adjourned Meetings. Any meeting of the Board of Directors may be adjourned from time to time and to any place, without further notice, by the affirmative vote of a majority of the Directors present at the meeting, even if less than a quorum. At any adjourned meeting at which a quorum shall be present, any business may be conducted which might have been transacted at the meeting as originally notified. (As amended 4/29/91.)

Section 3.11. Vote Required for Action. Except as otherwise provided in these By-laws, the affirmative vote of a majority of the number of Directors fixed by these By-laws shall be required for and shall be sufficient for the adoption of any motion or resolution or the taking of any action at any meeting of the Board of Directors. However, the following actions may be taken by the affirmative vote of a majority of the Directors present at the meeting, even if less than a quorum: election or appointment of a Chairman or temporary Secretary of the meeting (if necessary), or adoption of any motion to adjourn or recess the meeting or any proper amendment of any such motion. Whenever the minutes of any meeting of the Board of Directors shall state that any motion or resolution was adopted or that any action was taken at such meeting of the Board of Directors, such minutes shall be prima facie evidence that such motion or resolution was duly adopted or that such action was duly taken by the required vote, and such minutes need not state the number of Directors voting for and against such motion, resolution, or action.

Section 3.12. Voting. Each Director (including, without limiting the generality of the foregoing, any Director who is also an officer of the Corporation and any Director presiding at a meeting) may vote on any question at any meeting of the Board of Directors, except as otherwise expressly provided in these By-laws. (As amended 4/23/64.)

Section 3.13. Organization. The Chairman of the Board of Directors or the Lead Director or the President or a Vice-President, as provided in these By-laws, shall preside at each meeting of the Board of Directors; but if the Chairman of the Board of Directors, the Lead Director, the President, and each Vice-President shall be absent or refuse to act, the Board of Directors may elect or appoint a Chairman to preside at the meeting. The Secretary or an Assistant Secretary, as provided in these By-laws, shall act as Secretary of each meeting of the Board of Directors; but if the Secretary and each Assistant Secretary shall be absent or refuse to act, the Board of Directors may elect or appoint a temporary Secretary to act as Secretary of the meeting. (As amended 4/23/64, 8/1/79 and 5/3/05.)

Section 3.14. Rules and Order of Business. The Board of Directors may adopt such rules and regulations, not inconsistent with applicable law or the Articles of Incorporation or these By-laws, as the Board of Directors deems advisable for the conduct of its meetings. Except as otherwise expressly required by law or the Articles of Incorporation or these By-laws or such rules or regulations, meetings of the Board of Directors shall be conducted in accordance with Robert's Rules of Order, Revised (as further revised from time to time). Unless otherwise determined by the Board of Directors, the order of business at the first meeting of the Board of Directors held after each annual meeting of shareholders, and at other meetings of the Board of Directors to the extent applicable, shall be as follows:

(1)

Roll call or other determination of attendance and quorum.

(2)

Proof of notice of meeting.

(3)

Reading and action upon minutes of preceding meeting and any other unapproved minutes.

(4)

Report of President.

(5)

Reports of other officers and committees.

(6)

Election of officers.

(7)

Unfinished business.

(8)

New business.

(9)

Adjournment.

Failure to comply with the requirements of this Section shall not affect the validity of any action taken at any meeting unless (a) specific and timely objection is made at the meeting and (b) the person complaining thereto sustains direct and material damage by reason of such failure.

Section 3.15. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof at which action on any corporate matter is taken, shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered or certified mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.

Section 3.16. Waiver of Notice by Directors. Whenever any notice whatsoever is required to be given to any Director of the Corporation under any provision of law or the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the Director or Directors entitled to such notice, whether signed before or after the time of the meeting or event of which notice is required, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in any waiver of notice of such meeting. The attendance of any Director at any meeting of the Board of Directors shall constitute a waiver by such Director of any notice of such meeting to which such Director would otherwise be entitled, and shall constitute consent by such Director to the place, day, and hour of such meeting and all business which may be conducted at such meeting, unless such Director attends such meeting and objects at such meeting to any business conducted because the meeting is not lawfully called or convened. (As amended 4/29/91.)

Section 3.17. Informal Action by Directors. Any action required by law or the Articles of Incorporation or these By-laws to be taken by vote of or at a meeting of the Board of Directors, or any action which may or could be taken at a meeting of the Board of Directors (or of a committee of Directors), may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the Directors then in office (or all of the members of such committee, as the case may be). Such consent shall have the same force and effect as unanimous vote. The signing by each such Director (or by each member of such committee) of any one of several duplicate originals or copies of the instrument evidencing such consent shall be sufficient. The written instrument or instruments evidencing such consent shall be filed with the Secretary, and shall be kept by the Secretary as part of the minutes of the Corporation. Such action shall be deemed taken on the date of such written instrument or instruments as stated therein, or on the date of such filing with the Secretary, whichever of such two dates occurs first. (As amended 4/23/64.)

Section 3.18. Committees. The Board of Directors, by resolution adopted by the affirmative vote of a majority of the number of Directors fixed by Section 3.03, may designate one or more committees (including, without limiting the generality of the foregoing, an Executive Committee). Each committee shall consist of two or more Directors elected or appointed by the Board of Directors. To the extent provided in such resolution as initially adopted and as thereafter supplemented or amended by further resolution adopted by a like vote, any such committee shall have and may exercise, when the Board of Directors is not in session, all the authority and powers of the Board of Directors. However, no committee shall have or exercise any authority prohibited by law.

No member of any committee shall continue to be a member thereof after he ceases to be a Director of the Corporation.

Unless otherwise ordered by the Board of Directors, the affirmative vote or consent in writing of all members of a committee shall be required for the adoption of any motion or resolution or the taking of any action by any such committee, except that an alternate member may take the place of any absent member to the extent hereinafter provided.

The Board of Directors may elect or appoint one or more Directors as alternate members of any such committee. Any such alternate member may take the place of any absent member, upon request by the Chairman of the Board of Directors or the Lead Director or the President or the Chairman of such committee. The vote or consent in writing of such alternate member in the absence of such member shall have the same effect as the vote or consent in writing of such member. (As amended 8/1/79 and 5/3/05.)

The Board of Directors may at any time increase or decrease the number of members of any committee, fill vacancies therein, remove any member thereof, adopt rules and regulations therefor, or change the functions or terminate the existence thereof. The designation of any committee and the delegation thereto of authority shall not operate to relieve the Board of Directors or any Director of any responsibility imposed by law. (As amended 4/23/64.)

Section 3.19. Compensation. The Board of Directors may fix or provide for reasonable compensation of any or all Directors for services rendered to the Corporation as Directors, including, without limiting the generality of the foregoing, payment of expenses of attendance at meetings of the Board of Directors or committees, payment of a fixed sum for attendance at each meeting of the Board of Directors or a committee, salaries, bonuses, pensions, pension plans, pension trusts, profit-sharing plans, stock bonus plans, stock option plans (subject to approval of the shareholders if required by law), and other incentive, insurance, and welfare plans, whether or not on account of prior services rendered to the Corporation. No such compensation shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. (As amended 2/11/04.)

ARTICLE 4. OFFICERS

Section 4.01. Number and Designation. The officers of the Corporation shall be a Chairman of the Board of Directors, a Lead Director of the Board of Directors, a Chief Executive Officer, a President, one or more Vice-Presidents, a Secretary, a Treasurer, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as the Board of Directors deems advisable. (As amended 4/23/64, 8/1/79, 2/11/04 and 5/3/05.)

Section 4.02. Election or Appointment of Officers. At the first meeting of the Board of Directors held after each annual meeting of shareholders, the Board of Directors shall elect the officers specifically referred to in Section 4.01, and shall elect or appoint such other officers and agents as the Board deems advisable. If in any year the election of officers does not take place at such meeting, such election shall be held as soon thereafter as may be convenient. In addition, the Board of Directors may from time to time elect, appoint, or authorize any officer to appoint such other officers and agents as the Board deems advisable. Any election may be conducted by ballot, but need not be conducted by ballot unless required by a rule, regulation, or motion adopted by the Board of Directors. (As amended 3/3/80 and 2/11/04.)

Section 4.03. Tenure and Qualifications. Each officer, unless sooner removed as provided in Section 4.04, shall hold office until his successor shall be elected or appointed and shall qualify. However, any officer may resign at any time by filing his written resignation with the President or Secretary of the Corporation; and such resignation shall take effect immediately upon such filing, unless a later effective date is stated therein. Officers need not be residents of the State of Iowa or Directors or shareholders of the Corporation. Any two or more offices may be held by the same person.

Section 4.04. Removal. Any officer or agent of the Corporation may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

Section 4.05. Vacancies. Any vacancy occurring in any office for any reason may be filled by the Board of Directors.

Section 4.06. Duties and Powers of Officers. Except as otherwise expressly provided by law or the Articles of Incorporation or these By-laws, the duties and powers of all officers and agents of the Corporation shall be determined and defined from time to time by the Board of Directors. Unless otherwise determined by the Board of Directors, the officers referred to in the following Sections shall have the duties and powers set forth in the following Sections, in addition to all duties and powers of such officers prescribed by law or by the Articles of Incorporation or other provisions of these By-laws. However, the Board of Directors may from time to time alter, add to, limit, transfer to another officer or agent, or abolish any or all of the duties and powers of any officer or agent of the Corporation (including, without limiting the generality of the foregoing, the duties and powers set forth in the following Sections and in other provisions of these By-laws). Any person who holds two or more offices at the same time may perform or exercise any or all of the duties and powers of either or both of such offices in either or both of such capacities.

Section 4.07. Chairman of the Board of Directors; Lead Director; Chief Executive Officer; President.

(a) The Chairman of the Board of Directors shall preside at all meetings of shareholders and of the Board of Directors. He shall be responsible for making recommendations concerning Board policies and committees, shall maintain Board liaison with the Chief Executive Officer and the President, and, when required, because of the inability of the Chief Executive Officer to act or otherwise, shall have the same powers as the Chief Executive Officer on behalf of the Corporation. He may from time to time, unless otherwise ordered by the Board, authorize or direct the Lead Director, Chief Executive Officer or President to perform any of the duties or exercise any of the powers of the Chairman. (As amended 10/27/77, 10/30/84, 2/15/88, 7/29/91, 2/12/03 and 5/3/05.)

(b) The Lead Director shall preside at meetings of the shareholders or of the Board in the absence of the Chairman. He shall also perform such other duties as the Chairman may authorize or direct. (As amended 7/29/91 and 5/3/05.)

(c) The Chief Executive Officer shall be the principal executive officer of the Corporation. Subject only to the Board of Directors, he shall be in charge of the business of the Corporation; he shall see that all Corporation policies and all orders and resolutions of the Board are carried into effect except in those instances in which that responsibility is specifically assigned to some other person by the Board of Directors; and, in general, he shall discharge all duties incident to the office of the chief executive officer of the Corporation and such other duties as may be prescribed by the Board from time to time. In the absence of the Chairman and Lead Director, the Chief Executive Officer shall preside at meetings of shareholders and of the Board. (As amended 2/12/03 and 5/3/05.)

(d) The President shall be the principal operating officer of the Corporation and, subject only to the Board of Directors and to the Chief Executive Officer, he shall have the general authority over and general management and control of the property, business and affairs of the Corporation. In general, he shall discharge all duties incident to the office of the principal operating officer of the Corporation and such other duties as may be prescribed by the Board of Directors and the Chief Executive Officer from time to time. In the absence of the Chairman, Lead Director, and Chief Executive Officer, the President shall preside at all meetings of shareholders and Board of Directors. In the absence of the Chairman and the Chief Executive Officer or in the event of their disability, or inability to act, or to continue to act, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all of the powers of and be subject to all of the restrictions upon the office of the Chief Executive Officer. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the Corporation or a different mode of execution is expressly prescribed by the Board of Directors or these By-laws, he may employ, appoint and discharge such employees, agents, attorneys and accountants (except the certified public accountants appointed by the Audit Committee of the Board as the independent auditor for the Corporation) for the Corporation as he deems necessary or advisable, and shall prescribe their authority, duties, powers, and compensation, including, if appropriate, the authority to perform some or all of the duties or exercise some or all of the powers of the President; and may make and enter into on behalf of the Corporation all deeds, conveyances, mortgages, leases, contracts, agreements, bonds, reports, releases, and other documents or instruments which may in his judgment be necessary or advisable in the ordinary course of the Corporation's business or which shall be authorized by the Board. (As amended 7/29/91, 2/12/03, 2/11/04 and 5/3/05.)

Section 4.08. Vice-Presidents. Two or more Vice Presidents, one or more of whom may also be designated as Executive Vice President or Senior Vice President, each of whom shall have such duties and powers as may be prescribed from time to time by the President or the Board of Directors. (As amended 4/23/64, 10/27/77 and 11/10/00.)

Section 4.09. Secretary. The Secretary:

(a) shall, when present, act as Secretary of each meeting of the shareholders and of the Board of Directors;

(b) shall keep as permanent records the minutes of the meetings of the shareholders and the Board of Directors, a record of all actions taken by the shareholders and the Board of Directors without a meeting, and a record of all actions taken by a committee of the Board of Directors in place of the Board of Directors on behalf of the Corporation in one or more books provided for that purpose; (As amended 2/12/03.)

(c) shall see that all notices are duly given and that lists of shareholders are made and filed as required by law or the Articles of Incorporation or these By-laws;

(d) shall be custodian of and authenticate the corporate records of the Corporation as required by the Iowa Business Corporation Act and the seal of the Corporation and shall, when duly authorized, see that the seal is affixed to any instrument requiring it; (As amended 2/12/03.)

(e) shall keep a record of the Directors, giving the names and business addresses of all Directors; and (As amended 4/23/64, 2/19/79 and 2/12/03.)

(f) shall have all the usual duties and powers of the Secretary of a corporation and such duties and powers as may be prescribed from time to time by the Chief Executive Officer, the President or the Board of Directors. (As amended 2/19/79 and 2/12/03.)

Section 4.10. Treasurer. The Treasurer:

(a) shall have charge and custody of and be responsible for all funds, securities, and evidences of indebtedness belonging to the Corporation;

(b) shall receive and give receipts for moneys due and payable to the Corporation from any source whatever;

(c) shall see that all such moneys are deposited in the name of and to the credit of the Corporation in such depositories as shall be designated by or pursuant to authority granted by the Board of Directors;

(d) shall cause the funds of the Corporation to be disbursed when and as duly authorized to do so;

(e) shall see that correct and complete books of account and financial statements are kept and prepared in accordance with generally accepted accounting principles except to the extent such duties are assigned by the President to other officers or employees of the Corporation; (As amended 2/13/77.)

(f) shall have all the usual duties and powers of the Treasurer of a corporation and such duties and powers as may be prescribed from time to time by the President or the Board of Directors; (As amended 2/13/77.)

(g) shall keep at the registered office or principal place of business of the Corporation a record of its shareholders (which shall be part of the stock transfer books of the Corporation), giving the names and addresses of all shareholders and the number and class of the shares held by each; and (As amended 2/19/79.)

(h) shall have charge of the stock transfer books of the Corporation, and shall record the issuance and transfer of shares, except to the extent that such duties shall be delegated by the Board of Directors to a transfer agent or registrar. (As amended 2/19/79.)

Section 4.11. Assistant Secretaries. In the absence of the Secretary or in the event of his death or inability or refusal to act, the Assistant Secretary (or, if there shall be more than one, the Assistant Secretaries in the order designated by the Board of Directors from time to time, or, in the absence of any such designation, in the order in which their names shall appear in the minutes showing their election) shall perform the duties and exercise the powers of the Secretary. Each Assistant Secretary shall also have such duties and powers as may be prescribed from time to time by the Secretary or the President or the Board of Directors. (As amended 4/23/64.)

Section 4.12. Assistant Treasurers. In the absence of the Treasurer or in the event of his death or inability or refusal to act, the Assistant Treasurer (or, if there shall be more than one, the Assistant Treasurers in the order designated by the Board of Directors from time to time, or, in the absence of any such designation, in the order in which their names shall appear in the minutes showing their election) shall perform the duties and exercise the powers of the Treasurer. Each Assistant Treasurer shall also have such duties and powers as may be prescribed from time to time by the Treasurer or the President or the Board of Directors. (As amended 4/23/64.)

Section 4.13. Compensation. The Board of Directors may fix or provide for, or may authorize any officer to fix or provide for, reasonable compensation of any or all of the officers, except the Chief Executive Officer, and agents of the Corporation, including, without limiting the generality of the foregoing, salaries, bonuses, payment of expenses, pensions, pension plans, pension trusts, profit-sharing plans, stock bonus plans, stock option plans (subject to approval of the shareholders if required by law), and other incentive, insurance, and welfare plans, whether or not on account of prior services rendered to the Corporation. The compensation of the Chief Executive Officer shall be set by the Human Resources and Compensation Committee in connection with the independent directors who are not members of that Committee. (As amended 4/23/64 and 2/11/04.)

Section 4.14. Bond. The Board of Directors may require an officer or agent to give a bond for the faithful performance of his duties, in such amount and with such surety or sureties as the Board of Directors deems advisable.

ARTICLE 5. SHARES AND CERTIFICATES

Section 5.01. Issuance of and Consideration for Shares. Shares and securities convertible into shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, and may be issued to such persons as may be designated from time to time by or pursuant to authority granted by the Board of Directors, except as otherwise required by law or the Articles of Incorporation or these By-laws. (As amended 5/12/97.)

Section 5.02. Restrictions on Issuance of Shares and Certificates. No share of the Corporation shall be issued until such share is fully paid as provided by law. (As amended 5/12/97.)

No fractional share or certificate representing any fractional share shall be issued unless expressly authorized by the Board of Directors. (As amended 8/7/07.)

With respect to certificated shares, if any, no new certificate shall be issued in place of any certificate until the old certificate for a like number of shares shall have been surrendered and cancelled and a new certificate requested, except as otherwise provided in Section 5.04. (As amended 8/7/07.)

Section 5.03. Certificates Representing Shares.

(a) At the election of the Board of Directors, ownership of shares may be evidenced by a certificate or certificates representing the shares of the Corporation owned by him. Certificates representing shares of the Corporation shall be in such form as shall be determined by or pursuant to authority granted by the Board of Directors. Each certificate shall be signed by the President or a Vice-President and by the Secretary or an Assistant Secretary, and the corporate seal may be affixed thereto. All certificates shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, and the number and class of shares and date of issuance, shall be entered on the stock transfer books of the Corporation. (As amended 8/7/07.)

(b) Notwithstanding Section 5.03(a) hereof, the Board of Directors may authorize the issuance of some or all shares without certificates. The authorization does not affect the shares already represented by certificates until they are surrendered to the Corporation. At the time of issuance or transfer of shares without certificates, the Corporation shall send the shareholders a written statement of the information required under the Iowa Business Corporations Act. (As amended 8/7/07.)

Section 5.04. Lost, Destroyed, Stolen, or Mutilated Certificates. With respect to certificated shares, if any, the Board of Directors may authorize a new certificate to be issued in place of any certificate alleged to have been lost, destroyed, or stolen, or which shall have been mutilated, upon production of such evidence and upon compliance with such conditions as the Board of Directors may prescribe. (As amended 8/7/07.)

Section 5.05. Transfer of Shares. Shares of the Corporation shall be transferable only on the stock transfer books of the Corporation, by the holder of record thereof or by his duly authorized attorney or legal representative (who shall furnish such evidence of authority to transfer as the Corporation or its agent may reasonably require), upon compliance with the customary procedures for transferring shares in uncertificated form or surrender to the Corporation for cancellation of the certificate representing such shares, duly endorsed or with a proper written assignment or power of attorney duly executed and attached thereto, and with such proof of the authenticity of signatures as the Corporation or its agent may reasonably require. The Corporation shall cancel the old certificate, issue a new certificate to the person entitled thereto, and record the transaction on its stock transfer books. However, if the applicable law permits shares to be transferred in a different manner, then to the extent required to comply with such law all references in this Section to "shares" shall mean the rights against the Corporation inherent in or arising out of such shares. (As amended 8/7/07.)

Section 5.06. Shareholders of Record; Change of Name or Address. The Corporation shall be entitled to recognize the exclusive right of a person shown on its stock transfer books as the holder of shares to receive notices and dividends, to vote as such holder, and to have and exercise all other rights deriving from such shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have actual or constructive notice thereof. Unless the context or another provision of these By-laws clearly indicates otherwise, all references in these By-laws to "shareholders" and "holders" shall mean the shareholders of record as shown on the stock transfer books of the Corporation.

Each shareholder and each Director shall promptly notify the Secretary in writing of his correct address and any change in his name or address from time to time. If any shareholder or Director fails to give such notice, neither the Corporation nor any of its Directors, officers, agents, or employees shall be liable or responsible to such shareholder or Director for any error or loss which might have been prevented if such notice had been given. (As amended 4/23/64.)

Section 5.07. Regulations. The Board of Directors may adopt such rules and regulations, not inconsistent with applicable law or the Articles of Incorporation or these By-laws, as it deems advisable concerning the issuance, transfer, conversion, and registration of certificates, if any, representing shares of the Corporation. (As amended 8/7/07.)

ARTICLE 6. GENERAL PROVISIONS

Section 6.01. Seal. The corporate seal shall be circular in form and shall have inscribed thereon the name of the Corporation and the words "Corporate Seal" and "Iowa". The seal may be affixed by causing it or a facsimile thereof to be impressed or reproduced or otherwise.

Section 6.02. Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board of Directors from time to time.

Section 6.03. Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on the outstanding shares in the manner and upon the terms and conditions provided by law and the Articles of Incorporation.

Section 6.04. Execution of Documents and Instruments. All deeds and conveyances of real estate, mortgages of real estate, and leases of real estate (for an initial term of five years or more) to be executed by the Corporation shall be signed in the name of the Corporation by the Chairman of the Board of Directors or the Lead Director or the Chief Executive Officer or the President or a Vice-President and signed or attested by the Secretary or an Assistant Secretary, and the corporate seal shall be affixed thereto.

All other documents or instruments to be executed by the Corporation (including, without limiting the generality of the foregoing, contracts, agreements, bonds, reports, notices, releases, promissory notes, and evidences of indebtedness; and deeds, conveyances, mortgages, and leases other than those referred to in the preceding sentence) shall be signed in the name of the Corporation by any one or more of the officers of the Corporation, with or without the corporate seal.

However, from time to time the Board of Directors or the Chairman of the Board of Directors or the Lead Director or the Chief Executive Officer or the President may alter, add to, limit, transfer to another officer or agent, or abolish the authority of any officer or officers to sign any or all documents or instruments, or may authorize the execution of any document or instrument by any person or persons, with or without the corporate seal, and such action may be either general or confined to specific instances. (As amended 4/23/64, 8/1/79, 2/11/04 and 5/3/05.)

Section 6.05. Loans. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by or pursuant to authority granted by the Board of Directors. Such authorization may be either general or confined to specific instances.

Section 6.06. Checks and Drafts. All checks and drafts issued in the name of the Corporation shall be signed by such person or persons and in such manner as shall be authorized by or pursuant to authority granted by the Board of Directors.

Section 6.07. Voting of Shares Owned by Corporation. Any shares or securities of any other corporation or company owned by this Corporation may be voted at any meeting of shareholders or security holders of such other corporation or company by the Chairman of the Board of Directors of this Corporation. Whenever in the judgment of the Chairman of the Board of Directors it shall be advisable for the Corporation to execute a proxy or waiver of notice or to give a consent with respect to any shares or securities of any other corporation or company owned by this Corporation, such proxy, waiver, or consent shall be executed in the name of this Corporation, as directed by the Chairman of the Board of Directors, without necessity of any authorization by the Board of Directors. Any person or persons so designated as the proxy or proxies of this Corporation shall have full right, power, and authority to vote such shares or securities on behalf of this Corporation. In the absence of the Chairman of the Board of Directors or in the event of his death or inability to act, the Lead Director may perform the duties and exercise the powers of the Chairman of the Board of Directors under this Section. The provisions of this Section shall be subject to any specific directions by the Board of Directors. (As amended 4/23/64, 8/1/79 and 5/3/05.)

Section 6.08. Director Conflict of Interest.

(a) A conflict of interest transaction is a transaction with the corporation in which a

Director of the Corporation has a direct or indirect interest. A conflict of interest transaction is not voidable by the Corporation solely because of the Director's interest in the transaction if any one of the following is true:

(1) The material facts of the transaction and the Director's interest were disclosed or known to the Board of Directors or a committee of the Board of Directors and the Board of Directors or committee authorized, approved or ratified the transaction.

(2) The material facts of the transaction and the Director's interest were disclosed or known to the shareholders entitled to vote and the shareholders authorized, approved or ratified the transaction.

(3) The transaction was fair to the Corporation.

(b) For purposes of these By-laws, a Director of the Corporation has an indirect interest in a transaction if either of the following is true:

(1) Another entity in which the Director has a material financial interest or in which the Director is a general partner is a party to the transaction.

(2) Another entity of which the Director is a director, officer or trustee is a party to the transaction and the transaction is or should be considered by the Board of Directors of the Corporation.

(c) For purposes of subsection a(1), a conflict of interest transaction is authorized, approved or ratified if it receives the affirmative vote of a majority of the Directors on the Board of Directors or on the committee, who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved or ratified under this section by a single Director. If a majority of the Directors who have no direct or indirect interest in the transaction vote to authorize, approve or ratify the transaction, a quorum is present for the purpose of taking action. The presence of, or a vote cast by, a Director with a direct or indirect interest in the transaction does not affect the validity of any action taken under subsection (a)(1), if the transaction is otherwise authorized, approved or ratified as provided in that subsection.

(d) For purposes of subsection (a)(2), a conflict of interest is authorized, approved or ratified if it receives the vote of a majority of the shares entitled to be counted under this subsection. Shares owned by or voted under the control of a Director who has a direct or indirect interest in the transaction, and shares owned by or voted under the control of an entity described in subsection (b)(1) shall not be counted in a vote of shareholders to determine whether to authorize, approve or ratify a conflict of interest transaction under subsection (a)(2). The vote of those shares, however, is counted in determining whether the transaction is approved under other sections of these By-laws. A majority of the shares, whether or not present, that are entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section. (As adopted 2/12/03.)

Section 6.09. Limitation of Officers' Liability. An officer shall not be liable as an officer to the Corporation or its shareholders for any decision to take or not to take action, or any failure to take any action, if the duties of the officer are performed in compliance with the standards of conduct for officers prescribed in the Iowa Business Corporation Act. (As amended 2/12/03.)

Section 6.10. Indemnification. The Corporation may indemnify a Director or officer of the Corporation who is a party to a proceeding against liability incurred by such Director or officer in the proceeding to the maximum extent now or hereafter permitted by and in the manner prescribed by the Iowa Business Corporation Act, including the advancement of expenses. Without limiting the generality of the foregoing, the Corporation may enter into indemnification agreements consistent with the Iowa Business Corporation Act with each Director of the Corporation and such officers of the Corporation as the Board of Directors deems appropriate from time to time. (As amended 2/12/03.)

Section 6.11. Reliance on Documents. Each Director and officer shall, in the performance of his duties, be fully protected in relying and acting in good faith upon the books of account or other records of the Corporation, or reports made or financial statements presented by any officer of the Corporation or by an independent public or certified public accountant or firm of such accountants or by an appraiser selected with reasonable care by the Board of Directors or by any committee thereof; and each Director and officer is hereby expressly relieved from any liability which might otherwise exist or arise from or in connection with any such action.

Section 6.12. Effect of Partial Invalidity. If a court of competent jurisdiction shall adjudge to be invalid any clause, sentence, paragraph, section, or part of the Articles of Incorporation or these By-laws, such judgment or decree shall not affect, impair, invalidate, or nullify the remainder of the Articles of Incorporation or these By-laws, but the effect thereof shall be confined to the clause, sentence, paragraph, section, or part so adjudged to be invalid.

Section 6.13. Definitions. Any word or term which is defined in the Iowa Business Corporation Act shall have the same meaning wherever used in the Articles of Incorporation or in these By-laws, unless the context or another provision of the Articles of Incorporation or these By-laws clearly indicates otherwise. Wherever used in the Articles of Incorporation or in these By-laws, unless the context or another provision of the Articles of Incorporation or these By-laws clearly indicates otherwise, the use of the singular shall include the plural, and vice versa; and the use of any gender shall be applicable to any other gender. Wherever used in the Articles of Incorporation or in these By-laws, the word "written" shall mean written, typed, printed, duplicated, or reproduced by any process. (As amended 4/23/64.)

Section 6.14. Authority to Carry Out Resolutions and Motions. Each resolution or motion adopted by the shareholders or by the Board of Directors shall be deemed to include the following provision, unless the resolution or motion expressly negates this provision: The officers of the Corporation are severally authorized on behalf of the Corporation to do all acts and things which may be necessary or convenient to carry out this resolution (motion), including, without limitation, the authority to make, execute, seal, deliver, file, and perform all appropriate contracts, agreements, certificates, documents, and instruments.

The foregoing provision shall automatically be a part of the resolution or motion even though not stated in the minutes; and any officer may state or certify that the foregoing provision is included in the resolution or motion. (Added entire section 8/3/82.)

ARTICLE 7. AMENDMENTS

Section 7.01. Reservation of Right to Amend. The Corporation expressly reserves the right from time to time to amend these By-laws, in the manner now or hereafter permitted by the provisions of the Articles of Incorporation and these By-laws, whether or not such amendment shall constitute or result in a fundamental change in the purposes or structures of the Corporation or in the rights or privileges of shareholders or others or in any or all of the foregoing. All rights and privileges of shareholders or others shall be subject to this reservation. Wherever used in these By-laws with respect to the By-laws, the word "amend," "amended," or "amendment" includes and applies to the amendment, alteration, or repeal of any or all provisions of the By-laws or the adoption of new By-laws. (As amended 4/28/66.)

Section 7.02. Procedure to Amend. Any amendment to these By-laws may be adopted at any meeting of the Board of Directors by the affirmative vote of a majority of the number of Directors fixed by Section 3.03. No notice of any proposed amendment to the By-laws shall be required. (As amended 4/28/66.)

Exhibit 10.2

2007 EQUITY PLAN

FOR NON-EMPLOYEE DIRECTORS OF

HNI CORPORATION

TABLE OF CONTENTS

			Page

I.	PURPOSES; EFFECT ON PRIOR PLANS		3
	1.1	Purpose	3
	1.2	Effect on Prior Plans	3

II.	DEFINITIONS		3

III.	ADMINISTRATION		7
	3.1	Administration by the Board; Delegation	7
	3.2	Administrative Powers	7
	3.3	Professional Assistance; Good Faith Actions	7
	3.4	Liability and Indemnification of Board Members	7

IV.	ELIGIBILITY		8

V.	SHARES AVAILABLE FOR AWARDS		8
	5.1	Shares Available	8
	5.2	Accounting for Awards	8
	5.3	Adjustments	8

VI.	OPTIONS		8
	6.1	Options	8
	6.2	Exercise Price	9
	6.3	Option Term	9
	6.4	Time, Method and Conditions of Exercise	9

VII.	STOCK AWARDS		9
	7.1	Restricted Stock	9
	7.2	Stock Grant Awards	10
	7.3	Additional Cash Award to Offset Tax	10

VIII.	GENERAL PROVISIONS GOVERNING AWARDS		10
	8.1	Consideration for Awards	10
	8.2	Awards Subject to Performance Measures	10
	8.3	Awards May Be Granted Separately or Together	10
	8.4	Forms of Payment under Awards	10
	8.5	Separation from Service; Vesting	10
	8.6	Limits on Transfer of Awards	12
	8.7	Restrictions; Securities Exchange Listing	12

IX.	ELECTION TO RECEIVE FEES IN SHARES		13
	9.1	Election to Receive Fees in Shares	13
	9.2	Participation Agreement.	13
	9.3	Issuance of Shares	13
	9.4	Holding Period	13

X.	AMENDMENT AND TERMINATION; CORRECTIONS		13
	10.1	Amendments to the Plan	13
	10.2	Amendments to Awards	14
	10.3	Correction of Defects, Omissions and Inconsistencies	14

XI.	GENERAL PROVISIONS GOVERNING PLAN		14
	11.1	No Rights to Awards	14
	11.2	Rights as Stockholder	14
	11.3	Governing Law	14
	11.4	Award Agreements	14
	11.5	No Limit on Compensation Plans or Arrangements	14
	11.6	No Right to Remain a Director	14
	11.7	Severability	15
	11.8	No Trust or Fund Created	15
	11.9	Securities Matters	15
	11.10	No Fractional Shares	15
	11.11	Headings	15
	11.12	Nontransferability	15
	11.13	No Other Agreements	15
	11.14	Incapacity	15
	11.15	Release	15
	11.16	Notices	16
	11.17	Successors	16

XII.	EFFECTIVE DATE AND TERM OF PLAN		16

2007 EQUITY PLAN

FOR NON-EMPLOYEE DIRECTORS OF

HNI CORPORATION

HNI Corporation, an Iowa corporation (the “Corporation”), first adopted the 2007 Equity Plan for Non-Employee Directors of HNI Corporation (the “Plan”) on May 8, 2007. The Plan was amended and restated effective May 8, 2007 to comply with Section 409A of the Internal Revenue Code. The Corporation hereby amends and restates the Plan, effective November 19, 2009.

I. PURPOSES; EFFECT ON PRIOR PLANS

1.1 Purpose . The purpose of the Plan is to aid the Corporation in recruiting and retaining non-employee directors (“Outside Directors”) capable of assuring the future success of the Corporation through the grant of Awards of stock-based compensation and the opportunity to receive fees in the form of stock of the Corporation. The Corporation expects the Awards and opportunities for stock ownership in the Corporation will provide incentives to Outside Directors to exert their best efforts for the success of the Corporation’s business and thereby align the interests of Outside Directors with those of the Corporation’s stockholders.

1.2 Effect on Prior Plans . From and after the date of stockholder approval of the Plan, no awards shall be granted under the 1997 Equity Plan for Non-Employee Directors of HNI Corporation, as amended, but all outstanding awards previously granted under that plan shall remain outstanding in accordance with their terms.

II. DEFINITIONS

In addition to other terms that may be defined elsewhere herein, wherever the following terms are used in this Plan with initial capital letters, they shall have the meanings specified below, unless the context clearly indicates otherwise.

(a)

“Award” means an Option, Restricted Stock or Stock Grant Award granted under the Plan. The term “Award” shall also mean Shares issued to a Participant pursuant to a Participation Agreement under Article 9 of the Plan.

(b)

“Award Agreement” means any written agreement, contract or other instrument or document evidencing an Award granted under the Plan. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Board.

(c)

“Board” means the Board of Directors of the Corporation.

(d)

“Chairman” means the Chairman of the Board.

(e)

“Change in Control” means:

(i) the acquisition by any individual, entity or group (with the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Corporation Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (I) any acquisition directly from the Corporation; (II) any acquisition by the Corporation; (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation; or (IV) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this paragraph; or

(ii) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease during a 12-month period for any reason to constitute a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a “Business Combination”), in each case, unless, following such Business Combination: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Corporation Voting Securities; (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination, if such change in the members of the Board was not indorsed by a majority of the members of the Incumbent Board.

(f)

“Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

(g)

“Corporation” means HNI Corporation, an Iowa corporation.

(h)

“Director” means a member of the Board.

(i)

“Disability , ” of a Director, means the inability of the Director to perform his or her services as a Director for six months.

(j)

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(k)

“Fair Market Value,” of a Share, means the closing price of a Share as reported on the New York Stock Exchange on the date as of which such value is being determined, or, if there are no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Board by whatever means or method as the Board, in the good faith exercise of its discretion, shall at such time deem reasonable and within the meaning of Code Section 409A and the regulations thereunder.

(l)

“Fees,” of an Outside Director, means the Outside Director’s annual retainer, meeting fees and any other amounts payable to the Outside Director by the Corporation for services performed as an Outside Director, excluding any amounts distributable under the Plan.

(m)

“Option” means an option granted under Article 6 of the Plan to purchase Shares. All Options granted under the Plan shall be “non-statutory stock options,” meaning they are not intended to satisfy the requirements set forth in Section 422 of the Code to be “incentive stock options.”

(n)

“Outside Director” means a member of the Board who is not an employee of the Corporation or a Subsidiary.

(o)

“Participant” means an Outside Director who receives an Award under the Plan, including an Outside Director who enters into a Participation Agreement pursuant to Section 9.2 of the Plan.

(p)

“Participation Agreement” means the agreement entered into by an Outside Director pursuant to Section 9.2 of the Plan under which the Outside Director elects to receive Fees in the form of Shares rather than cash.

(q)

“Performance Measure” means the criteria and objectives established by the Board, which shall be satisfied or met as a condition to the exercisability, vesting or receipt of all or a portion of an Award. Such criteria and objectives may include, but are not limited to, the attainment by a Share of a specified Fair Market Value for a specified period of time, earnings per Share, return to stockholders (including dividends), return on equity, earnings of the Corporation, revenues, market share, cash flow or cost reduction goals or any combination of the foregoing and any other criteria and objectives established by the Board. In the sole discretion of the Board, the Board may amend or adjust the Performance Measures or other terms and conditions of an outstanding Award in recognition of unusual or nonrecurring events affecting the Corporation or its financial statements or changes in law or accounting principles.

(r)

“Plan” means the “2007 Equity Plan for Non-Employee Directors of HNI Corporation,” as set forth herein and as may be amended or restated from time to time.

(s)

“Restricted Stock” means Shares subject to forfeiture restrictions established by the Board.

(t)

“Restricted Stock Award” means a grant of Restricted Stock under Section 7.1 of the Plan.

(u)

“Retirement Eligible Date,” of a Participant, means the date on which the Participant attains age 55 with at least ten years of service as a Board member. The Chairman or, with respect to the Chairman if the Chairman is a Participant, the Board, in his, her or its discretion, may waive or reduce the ten-year service requirement with respect to a Participant; provided if any such waiver or reduction applies to a benefit subject to Section 409A of the Code, such waiver or reduction is made before the Outside Director performs the services for which the benefit is payable.

(v)

“Separation from Service,” with respect to a Participant, has the meaning set forth in Treasury Regulation Section 1.409A-1(h) or any subsequent authority.

(w)

“Share” means a Share of common stock, par value of $1.00, of the Corporation or any other securities or property as may become subject to an Award pursuant to an adjustment made under Section 5.3 of the Plan.

(x)

“Stock Grant Award” means any right granted under Section 7.2 of the Plan.

(y)

“Subsidiary” means any corporation, joint venture, partnership, limited liability company, unincorporated association or other entity in which the Corporation has a direct or indirect ownership or other equity interest and directly or indirectly owns or controls 50 percent or more of the total combined voting or other decision-making power.

III. ADMINISTRATION

3.1 Administration by the Board; Delegation . The Plan shall be administered by the Board, which may from time to time delegate all or any part of its authority under the Plan to a committee or subcommittee of not less than two Directors appointed by the Board who are “non-employee directors” within the meaning of that term as defined in Rule 16b-3 under the Exchange Act. To the extent of any delegation by the Board under the Plan, references in the Plan to the Board shall also refer to the applicable committee or subcommittee. The majority of any such committee or subcommittee shall constitute a quorum, and the action of a majority of its members present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of such committee or subcommittee.

3.2 Administrative Powers . The Board shall have the power and authority to interpret the Plan and any Award or Award Agreement entered into under the Plan, to establish, amend, waive and rescind any rules and regulations relating to the administration of the Plan (including without limitation, the manner in which Participants shall make elections pursuant to Section 9.2 of the Plan and the terms of a Participation Agreement), to determine the terms and provisions of the Award Agreements (not inconsistent with the terms of the Plan), and to make all other determinations necessary or advisable for the administration of the Plan. The determinations of the Board in the administration of the Plan, as described in the Plan, shall be final, binding and conclusive.

3.3 Professional Assistance; Good Faith Actions . All expenses and liabilities members of the Board incur in connection with the administration of the Plan shall be borne by the Corporation. The Board may employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Board, the Corporation and the Corporation’s officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such persons.

3.4 Liability and Indemnification of Board Members . No member of the Board shall be liable for any act, omission, interpretation, construction or determination made in connection with the Plan in good faith, and the members of the Board shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law, except as otherwise may be provided in the Corporation’s Articles of Incorporation, By-laws and under any directors' and officers' liability insurance that may be in effect from time to time.

IV. ELIGIBILITY

Participation in the Plan shall be limited to Outside Directors.

V. SHARES AVAILABLE FOR AWARDS

5.1 Shares Available . Subject to adjustment as provided in Section 5.3, the total number of Shares available for all grants of Awards under the Plan shall be 300,000 Shares. Shares to be issued under the Plan will be authorized but unissued Shares or Shares that have been reacquired by the Corporation and designated as treasury shares. Shares subject to Awards that terminate, lapse or are cancelled or forfeited shall be available again for grant under the Plan. Shares tendered by a Participant or withheld by the Corporation as full or partial payment to the Corporation of the purchase or exercise price relating to an Award shall not be available for future grants under the Plan.

5.2 Accounting for Awards . For purposes of this Article 5, if an Award entitles the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards. For purposes hereof, an Award of Shares pursuant to a Participation Agreement under Article 9 shall be deemed to be granted on the date the Shares are issued to the Participant.

5.3 Adjustments . In the event any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Corporation, issuance of warrants or other rights to purchase Shares or other securities of the Corporation or other similar corporate transaction or event affects the Shares such that an adjustment is required in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Board shall, in such manner as it may deem equitable, adjust any or all of: (i) the number and type of Shares (or other securities or other property) that thereafter may be made the subject of Awards; (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards; (iii) the purchase or exercise price with respect to any Award; and (iv) the number and type of Shares (or other securities or other property) payable under a Participation Agreement pursuant to Article 9, provided such change is made in accordance with the requirements of Treas. Reg. § 1.409A-1(a)(5)(iii)(E)(4).

VI. OPTIONS

6.1 Options . The Board may grant Options with the terms and conditions set forth in this Article 6 and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Board shall determine.

6.2 Exercise Price . The purchase price per Share purchasable under an Option shall be determined by the Board and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option.

6.3 Option Term . The term of each Option shall be fixed by the Board but shall not be longer than ten years.

6.4 Time, Method and Conditions of Exercise . The Board shall determine the time or times at which an Option may be exercised in whole or in part, the method or methods by which, and the form or forms (including, without limitation, cash or Shares having a Fair Market Value on the exercise date equal to the applicable exercise price) in which, payment of the exercise price with respect thereto may be made or deemed to have been made.

VII. STOCK AWARDS

7.1 Restricted Stock . The Board may grant Awards of Restricted Stock with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Board shall determine:

(a) Restrictions. Shares of Restricted Stock shall be subject to such restrictions as the Board may impose (including, without limitation, satisfaction of Performance Measures or a performance period and a restriction on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Board may deem appropriate. The minimum vesting period of such Awards shall be one year from the date of grant.

(b) Forfeiture. Subject to Sections 8.5, upon a Participant’s Separation from Service during the applicable restriction period, all Shares of Restricted Stock held by the Participant at such time shall be forfeited and reacquired by the Corporation.

(c) Issuance and Delivery of Shares. Any Restricted Stock granted under the Plan shall be issued at the time the Restricted Stock Award is granted and may be evidenced in such manner as the Board may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Corporation. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares representing Restricted Stock no longer subject to restrictions shall be delivered to the Participant promptly after the applicable restrictions lapse or are waived.

(d) Restrictions on Dividends. Any Award of Restricted Stock may require any or all dividends or other distributions paid on the Shares during the period of restriction be automatically sequestered and reinvested on an immediate or deferred basis in additional Shares, in which case such additional Shares shall be subject to the same restrictions as the underlying Restricted Stock or such other restrictions as the Board may determine.

7.2 Stock Grant Awards . The Board may grant Shares without restrictions thereon. Subject to the terms of the Plan, Stock Grant Awards may have such terms and conditions as the Board shall determine.

7.3 Additional Cash Award to Offset Tax . The Board may provide, at or after the time of grant of a Restricted Stock Award or Stock Grant Award, for the payment of a cash award to the Participant intended to offset the amount of tax the Participant may incur in connection with such Award, including, without limitation, tax on the receipt of such cash award; provided, however, any such payment shall be made no later than by the end of the Participant’s taxable year next following the Participant’s taxable year in which the related taxes are remitted to the taxing authority.

VIII. GENERAL PROVISIONS GOVERNING AWARDS

8.1 Consideration for Awards . Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Board or required by applicable law.

8.2 Awards Subject to Performance Measures . The Board may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant or exercisability of an Award or portion thereof. Subject to the terms of the Plan and any applicable Award Agreement, the Performance Measures to be achieved during any performance period, the length of any performance period, the amount of any Award granted, the amount of any payment or transfer to be made pursuant to any such Award and any other terms and conditions applicable thereto shall be determined by the Board.

8.3 Awards May Be Granted Separately or Together . Awards may, in the discretion of the Board, be granted either alone or in addition to, in tandem with, or in substitution for, any other Award or any award granted under any other plan of the Corporation or any Subsidiary. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any other plan of the Corporation or any Subsidiary may be granted either at the same time as, or at a different time from, the grant of such other Awards or awards.

8.4 Forms of Payment under Awards . Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Corporation upon the grant, exercise or payment of an Award may be made in such form or forms as the Board shall determine (including, without limitation, cash, Shares, other securities, other Awards or other property, or any combination thereof), and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Board. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments.

8.5 Separation from Service; Vesting . All of the terms relating to the exercise, cancellation, forfeiture or other disposition of an Award upon a Separation from Service of a Participant shall be determined by the Board. Such determination shall be made at the time of the grant of such Award and shall be specified in the Award Agreement relating to the Award. Notwithstanding the foregoing or any other provision of the Plan to the contrary:

(a) If a Participant becomes an employee of the Corporation or a Subsidiary while continuing to serve as a Director, that fact alone shall not result in a Separation from Service or otherwise impair the rights such Director may have under the Plan, including, without limitation, the rights such Director may have under any Award outstanding under the Plan, but such Director shall no longer be eligible to receive any further Awards under the Plan.

(b) Each Award granted under the Plan shall become fully exercisable and vested upon the Participant’s death, Disability or the occurrence of a Change in Control, provided such Award had not then otherwise expired and the Participant is an Outside Director or employee of the Corporation on the date of death, Disability or a Change in Control. In addition thereto, in the case of an Award of an Option, such Award shall become fully exercisable and vested upon the Participant’s Retirement Eligible Date, provided such Award had not then otherwise expired and the Participant is an Outside Director or is employed by the Corporation on the Retirement Eligible Date.

(c) In the event of hardship or other special circumstances of a Participant who holds an Option Award that is not immediately exercisable or a Restricted Stock Award then subject to the restrictions set forth in Section 7.1(a) or a Stock Grant Award subject to the transfer restrictions set forth Section 8.6, the Board or the Chairman may in its (or his or her) sole discretion take any action it (or he or she) deems to be equitable under the circumstances or in the best interests of the Corporation, including, without limitation, waiving or modifying any limitation, restriction or requirement with respect to such Award. Notwithstanding the preceding sentence, in the event the Chairman is a Participant, for any Award granted to the Chairman, only the Board has discretion to take action it deems to be equitable under the circumstances or in the best interests of the Corporation, including, without limitation, waiving or modifying any limitation, restriction or requirement with respect to such Award.

(d) The Board may provide in any Award Agreement the Corporation shall have the right to repurchase from the Participant Restricted Stock granted under Section 7.1 then subject to the restrictions set forth in Section 7.1(a) immediately upon a Separation from Service for any reason at a cash price per Share equal to the cash price paid by the Participant for the Shares. In the discretion of the Board, provision may be made that no such right of repurchase shall exist in the event of a Separation from Service without cause or because of the Participant’s Separation from Service on or after the Participant’s Retirement Eligible Date, or due to death or Disability.

(e) For purposes of this Section 8.5, the Board shall determine whether a Participant’s Separation from Service is due to cause, occurs on or after the Participant’s Retirement Eligible Date or is due to death or Disability, or whether the Participant has incurred a hardship, and any such determination shall be final, binding and conclusive.

8.6 Limits on Transfer of Awards . Except as otherwise provided by the Board or the terms of the Plan, no Award (and no right thereunder) shall be transferable by a Participant other than by will or by the laws of descent and distribution. An Award of Restricted Stock shall provide that during the period the Award is subject to restrictions pursuant to Section 7.1(a), and any Stock Grant Award may provide that the transferability of the Shares subject to such Award shall be prohibited or restricted in the manner and to the extent prescribed by the Board at the time the Award is granted. Such restrictions may include, without limitation, a right of repurchase or first refusal in the Corporation or provisions subjecting Restricted Stock to continuing restrictions in the hand of the transferee. In addition, any Award may provide that all or any part of the Shares to be issued or transferred by the Corporation upon the exercise of an Option, or are no longer subject to forfeiture and restrictions on transfer referred to herein, shall be subject to further restrictions upon transfer. The Board may establish procedures as it deems appropriate for a Participant to designate an individual, trust or other entity as beneficiary or beneficiaries to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death. The Board, in its discretion and subject to such additional terms and conditions as it determines, may permit a Participant to transfer an Option to any “family member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act of 1933, as amended) at any time such Participant holds such Option, provided: (a) such transfer may not be for value ( i.e. , the transferor may not receive any consideration therefor) and the family member may not make any subsequent transfer other than by will or by the laws of descent and distribution; (b) no such transfer shall be effective unless reasonable prior notice thereof has been delivered to the Corporation and such transfer is thereafter effected subject to the specific authorization of, and in accordance with any terms and conditions made applicable to by, the Board; and (c) the transferee is subject to the same terms and conditions hereunder as the Participant. Each Option Award (or right under such Award) shall be exercisable during the Participant’s lifetime only by the Participant (except as provided herein or in an Award Agreement or amendment thereto) or, if permissible under applicable law, by the Participant’s guardian or legal representative. No Option Award or Restricted Stock Award (or right under any such Award) may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Corporation or any Subsidiary.

8.7 Restrictions; Securities Exchange Listing . All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Board may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Board may cause appropriate entries to be made or legends to be placed on the certificates for such Shares or other securities to reflect such restrictions. If the Shares or other securities are traded on a securities exchange, the Corporation shall not be required to deliver any Shares or other securities covered by an Award unless and until such Shares or other securities have been admitted for trading on such securities exchange.

IX. ELECTION TO RECEIVE FEES IN SHARES

9.1 Election to Receive Fees in Shares . Each Outside Director shall be eligible to elect to receive his or her Fees in the form of Shares rather than cash according to the following provisions of this Article 9.

9.2 Participation Agreement . For each calendar year, the Board shall specify an election period (which shall end no later than the last day of the calendar year immediately preceding such calendar year) during which an Outside Director may enter into an election to receive up to 100% of the Fees otherwise payable to him or her for the calendar year in the form of Shares rather than cash . The election shall be made pursuant to a Participation Agreement entered into by the Outside Director and filed with the Secretary of the Corporation no later than the expiration of the election period. A separate Participation Agreement must be entered into for each calendar year. Except as the Board may otherwise provide, the Participation Agreement in effect for a calendar year shall be irrevocable after the expiration of the election period for the calendar year.

9.3 Issuance of Shares . The Corporation shall issue Shares to the Outside Director for each calendar quarter during which the Outside Director has a Participation Agreement in effect. The Shares shall be issued on the date on which the quarterly meeting of the Board is held. The number of Shares so issued shall be equal to: (i) the dollar amount of the Fees the Outside Director has elected to receive as Shares for the calendar quarter pursuant to his or her Participation Agreement; divided by (ii) the Fair Market Value per Share on the date on which the Outside Director would have been paid the Fees in cash but for the Participation Agreement.

9.4 Holding Period . To the extent required to satisfy any condition for exemption available pursuant to Rule 16b-3 of the Exchange Act, Shares acquired by an Outside Director pursuant to this Article 9 shall be held by the Outside Director for a period of at least six months following the date of acquisition.

X. AMENDMENT AND TERMINATION; CORRECTIONS

10.1 Amendments to the Plan . The Board may amend, alter, suspend, discontinue or terminate the Plan; provided, however, notwithstanding any other provision of the Plan or any Award Agreement, prior approval of the stockholders of the Corporation shall be required for any amendment to the Plan that:

(a) requires stockholder approval under the rules or regulations of the Securities and Exchange Commission, the New York Stock Exchange, any other securities exchange or the National Association of Securities Dealers, Inc. applicable to the Corporation;

(b) increases the number of Shares authorized under the Plan as specified in Section 5.1(a) of the Plan;

(d) permits the award of Options at a price less than 100% of the Fair Market Value of a Share on the date of grant of such Option contrary to the provisions of Sections 6.2 of the Plan.

10.2 Amendments to Awards . Subject to the provisions of the Plan, the Board may waive any conditions of or rights of the Corporation under any outstanding Award, prospectively or retroactively. Except as otherwise provided in the Plan, the Board may amend, alter, suspend, discontinue or terminate any outstanding Award, prospectively or retroactively, but no such action may adversely affect the rights of the holder of such Award without the consent of the holder thereof.

10.3 Correction of Defects, Omissions and Inconsistencies . The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award, Award Agreement or Participation Agreement in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan.

XI. GENERAL PROVISIONS GOVERNING PLAN

11.1 No Rights to Awards . No Outside Director or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Outside Directors, Participants, holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants.

11.2 Rights as Stockholder . No person shall have any right as a stockholder of the Corporation with respect to any Shares or other equity security of the Corporation which is subject to an Award hereunder unless and until such person becomes a stockholder of record with respect to such Shares or equity security.

11.3 Governing Law . The Plan, each Award hereunder (and the related Award Agreement), each Participation Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Iowa and construed in accordance therewith without giving effect to principles of conflicts of laws.

11.4 Award Agreements . No Participant shall have rights under an Option or Restricted Stock award granted to such Participant unless and until an Award Agreement shall have been duly executed on behalf of the Corporation and, if requested by the Corporation, signed by the Participant.

11.5 No Limit on Compensation Plans or Arrangements . Nothing contained in the Plan shall prevent the Corporation or any Subsidiary from adopting or continuing in effect other or additional compensation plans or arrangements.

11.6 No Right to Remain a Director . The grant of an Award shall not be construed as giving a Participant the right to be retained as a Director of the Corporation, nor will it affect in any way the right of the Corporation to terminate a Participant’s position as a Director, with or without cause. In addition, the Corporation may at any time remove or dismiss a Participant from his or her position as a Director free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement.

11.7 Severability . If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Board, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect.

11.8 No Trust or Fund Created . Neither the Plan, any Award nor any Participation Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation or any Subsidiary and a Participant or any other person. To the extent any person acquires a right to receive payments from the Corporation or a Subsidiary pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Corporation or the Subsidiary.

11.9 Securities Matters . The Corporation shall not be required to deliver any Shares until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

11.10 No Fractional Shares . No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Board shall determine whether cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall be canceled, terminated or otherwise eliminated.

11.11 Headings . Headings are given to the Articles, Sections and Subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

11.12 Nontransferability . Except as set forth in Section 8.6, no Award or other benefit payable at any time under the Plan will be subject in any manner to alienation, sale, transfer, assignment, pledge, levy, attachment or encumbrance of any kind.

11.13 No Other Agreements . The terms and conditions set forth herein constitute the entire understanding of the Corporation, the Subsidiaries and the Participants with respect to the matters addressed herein.

11.14 Incapacity . In the event any Participant is unable to care for his or her affairs because of illness or accident, any payment due may be paid to the Participant’s spouse, parent, brother, sister, adult child or other person deemed by the Corporation to have incurred expenses for the care of the Participant, unless a duly qualified guardian or other legal representative has been appointed.

11.15 Release . Any payment of benefits to or for the benefit of a Participant made in good faith by the Corporation in accordance with the Corporation’s interpretation of its obligations hereunder, shall be in full satisfaction of all claims against the Corporation and all Subsidiaries for benefits under the Plan to the extent of such payment.

11.16 Notices . Any notice permitted or required under the Plan shall be in writing and shall be hand delivered or sent, postage prepaid, by first class mail, or by certified or registered mail with return receipt requested, to the Committee, if to the Corporation, or to the address last shown on the records of the Corporation, if to a Participant. Any such notice shall be effective as of the date of hand delivery or mailing.

11.17 Successors . All obligations of the Corporation under the Plan shall be binding upon and inure to the benefit of any successor to the Corporation, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and or assets of the Corporation.

XII. EFFECTIVE DATE AND TERM OF PLAN

The Plan became effective on May 8, 2007, the date it was approved by the stockholders of the Corporation at the Corporation’s annual meeting of stockholders. The amendment set forth herein shall become effective on November 19, 2009.

The Plan shall terminate at midnight on May 7, 2017, unless terminated before then by the Board. Awards may be granted, and Participation Agreements may be entered into, under the Plan until the Plan terminates or until all Shares available for Awards under the Plan have been purchased or acquired. Notwithstanding the preceding sentence, the Plan shall remain in effect for purposes of administering outstanding Awards and Participation Agreements as long as they are outstanding.

Exhibit 10.6

HNI CORPORATION

DIRECTORS DEFERRED COMPENSATION PLAN

DEFERRAL ELECTION AGREEMENT

Applies Only to Fees Earned in ________

This Deferral Election Agreement (this "Agreement") is made by and between HNI Corporation (the "Corporation") and _____________________________ (print name) (the "Director") on the date below. The Corporation has established a nonqualified deferred compensation plan, the HNI Corporation Directors Deferred Compensation Plan (the "Plan"), for the benefit of the Corporation's outside Directors. The Plan permits the Director to defer a percentage of the Director's annual retainer, including any common stock grant, meeting fees (if any) and any other amounts payable to the Director by the Corporation for services performed as a Director (collectively, "Fees"). The deferral for the Plan year commencing ______________ (the "Current Election Year") is made by entering into this Agreement with the Corporation.

The Corporation and the Director agree as follows:

1. Fee Reduction Election. The Corporation will reduce the amount of the Director's Fees otherwise payable to the Director for services performed in the Current Election Year and will credit these amounts to the Director's account under the Plan according to the Director's elections in Section 4 below.

2. Accounts. The Corporation will maintain two accounts under the Plan, the Cash Account and the Stock Account. The Cash Account will be credited with interest at prime rate plus one percentage point. The Stock Account will be held in stock units. Each stock unit will be equal to a share of common stock of the Corporation ("Stock") and will be credited with reinvested dividends as if actually held in the form of Stock. The Director may elect to have Fees that otherwise (but for this Agreement) would have been paid to the Director in the form of cash, credited to the Stock Account and held in the form of stock units or credited to the Cash Account. Fees deferred under this Agreement that would otherwise be paid to the Director in the form of Stock will automatically be credited to the Stock Account and held in stock units.

3. Manner of Distribution of Accounts. All distributions from the Cash Account will be made in cash. All distributions from the Stock Account will be made in Stock. The Director may elect when and how amounts credited under this Agreement will be distributed. Distributions may be made in a lump sum or annual installments over a period of years, elected by the Director.

4. Director's Election for Current Election Year. Please fill in all applicable blanks (showing "0" if no amount will be deferred) and check all applicable boxes below to complete the election.

a. Amount Deferred

i. Deferral from Cash Fees

The Director elects to defer Fees payable in cash for services performed in the Current Election Year to be credited to the Director's Cash Account and/or Stock Account as follows:

Cash Account: _____% (Insert percent)

Stock Account: _____% (Insert percent)

(together, can be no more than 100%)

ii. Deferral from Stock Fees

The Director elects to defer Fees payable in Stock (common stock grant) for services performed in the Current Election Year to be credited to the Director's Stock Account as follows:

Stock Account: _____% (Insert percent)

b. When/How Distributions Are Made

Distribution from the Cash Account will be made in the form of cash. Distributions from the Stock Account will be made in the form of Stock, which will be delivered to the Corporation's transfer agent and placed in a direct registration account in the Director's name unless the Director notifies the Corporation in sufficient time to coordinate a different share delivery method. All distributions from the Plan will be made on the 3 rd Monday of January. Distributions from both the Cash Account and the Stock Account will be made as follows:

i. Distribution Date : [Select one]

Separation from Service (as defined in the Plan)

Commencement date: Distribution from the Cash Account and/or Stock Account will commence in _____ [Specify year in which distributions will begin, may be no earlier than ______.]

ii. Form of Distribution : [Select one]

Lump sum

Substantially equal annual installments over ___ years [Insert number of years, not to exceed 15.]

Note: You may change the time and form of distribution of an account only under limited circumstances, generally requiring an additional 5-year deferral of your benefit commencement date.

The Corporation reserves the right to amend the Plan in any manner and to terminate the Plan and, to the extent permitted by Section 409A of the Internal Revenue Code and other applicable law, require an immediate distribution of all accounts.

5. The above deferral elections are based on the assumption the Corporation will, in _____, continue its established practice of paying 50% of director compensation in cash and 50% in Stock. If actual _____ director compensation varies (for example, 100% cash and 0% Stock), the Corporation will adjust the amount deferred in Stock or cash (as the case may be) under this Agreement so the dollar amount of the total deferral is the same as if the Corporation paid compensation according to the 50%-50% established practice.

6. The Director understands this Agreement is subject to all of the terms and conditions of the Plan, and acknowledges the Director has either read, or been given the opportunity to read, the Plan. In particular, the Director understands there are some exceptions to the payment terms described above. For example, if the Director Separates from Service for reasons other than Retirement (as defined in the Plan), payment of the Director's account will generally be made in a lump sum when the Director Separates from Service, and a single lump-sum distribution will be made to the Director in the event of a Change in Control (as defined in the Plan).

7. The Director acknowledges in making the decision to defer Fees under the Plan, the Director has not relied upon any financial or tax advice provided by the Corporation, and the Director understands the Corporation has not received a ruling or determination from the Internal Revenue Service as to the effect of the deferral on the Director's income or employment tax liability.

8. Except as permitted by the Plan and applicable law or deemed advisable by the Corporation in order to preserve the intended tax consequences of the Plan, this Agreement, once made, may not be revoked. It is binding upon, and will inure to the benefit of, the Director, the Director's beneficiaries, heirs and personal representatives, the Corporation and its successors and assigns.

Dated this ____ day of _______________, _______.

	DIRECTOR:

Received and accepted by HNI Corporation this______day of_________________, ______.

	HNI Corporation


	By:
	Name:
	Title:

Exhibit 10.12

HNI CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

As Amended and Restated Effective November 19, 2009

TABLE OF CONTENTS

			Page

I.	AMENDMENT AND RESTATEMENT		1
	1.1	Amendment and Restatement.	1
	1.2	Purpose	1
	1.3	Application of the Plan.	1

II.	DEFINITIONS		1
	2.1	Definitions.	1
	2.2	Gender and Number	6

III.	ELIGIBILITY AND PARTICIPATION		6
	3.1	Eligibility	6
	3.2	Participation	6
	3.3	Missing Persons	6

IV .	ESTABLISHMENT AND ENTRIES TO ACCOUNTS		6
	4.1	Accounts	6
	4.2	Deferral Election Agreement	7
	4.3	Adjustments to Accounts	9
	4.4	Commencement and Form of Distribution of Sub-Accounts	9
	4.5	Exceptions to Payment Terms	13
	4.6	Death Benefit	15
	4.7	Funding	15

V .	ADMINISTRATION		16
	5.1	Administration	16
	5.2	Actions of the Committee	16
	5.3	Delegation	16
	5.4	Expenses	16
	5.5	Reports and Records	16
	5.6	Valuation of Accounts and Account Statements	16
	5.7	Indemnification and Exculpation	17

VI.	BENEFICIARY DESIGNATION		17
	6.1	Designation of Beneficiary	17
	6.2	Death of Beneficiary	17
	6.3	Ineffective Designation	17

VII.	WITHHOLDING		17

VIII.	CHANGE IN CONTROL, AMENDMENT, AND TERMINATION		18
	8.1	Change in Control	18
	8.2	Plan Amendment and Termination	18

IX.	CLAIMS PROCEDURE		18

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X.	MISCELLANEOUS		19
	10.1	Rights as Stockholder	19
	10.2	Governing Law	19
	10.3	No Limit on Compensation Plans or Arrangements	19
	10.4	No Rights to Employment	19
	10.5	Severability	19
	10.6	Securities Matters	20
	10.7	No Fractional Shares	20
	10.8	Headings	20
	10.9	Nontransferability	20
	10.10	Unfunded Plan	20
	10.11	No Other Agreements	20
	10.12	Incapacity	20
	10.13	Release	20
	10.14	Notices	20
	10.15	Successors	20

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HNI CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

I. AMENDMENT AND RESTATEMENT

1.1 Amendment and Restatement . HNI Corporation, an Iowa corporation (the "Corporation"), established this HNI Corporation Executive Deferred Compensation Plan (the "Plan"), effective February 13, 1986. The Corporation has amended and restated the Plan from time to time, most recently effective January 1, 2005. The Corporation hereby again amends and restates the Plan, effective November 19, 2009 (the "Restatement Date"), to accomplish certain changes to its form and operation.

1.2 Purpose . The purpose of the Plan is to give eligible executive members of the Corporation and certain of its Subsidiaries the opportunity to defer the receipt of compensation to supplement their retirement savings and to achieve their personal financial planning goals.

1.3 Application of the Plan . Except as otherwise set forth herein, the terms of the Plan, as amended and restated herein, apply to all amounts deferred under the Plan, whether before, on, or after the Restatement Date.

II. DEFINITIONS

2.1 Definitions . Whenever used in the Plan, the following terms shall have the meaning set forth below and, when the defined meaning is intended, the term is capitalized:

(a) “Account” means the device used to measure and determine the amount of benefits payable to a Participant or Beneficiary under the Plan. The Corporation shall establish a Cash Account and Stock Account for each Participant under the Plan, and the term "Account," as used in the Plan, may refer to either such Account or the aggregate of the two Accounts. In addition, the Corporation shall establish a separate Sub-Account under each of the Participant's Cash Account and Stock Account for each Deferral Election Agreement entered into by the Participant pursuant to Section 4.2.

(b) “Annual Incentive,” of a Participant for a Plan Year, means the incentive compensation awarded by the Employer to a Participant in cash or Stock for services performed by the Participant during the Plan Year, as provided in the HNI Corporation Annual Incentive Plan, or any predecessor plan thereto.

(c) “Base Salary,” of a Participant for a Plan Year, means the base salary, including all regular basic wages before reduction for any amounts deferred on a tax-qualified or nonqualified basis, payable in cash to the Participant for services rendered to an Employer during the Plan Year. Base Salary shall exclude incentive compensation, special fees or awards, allowances or any other form of premium or incentive pay, or amounts designated by an Employer as payment toward or reimbursement of expenses.

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(d) “Beneficiary” means the persons or entities designated by a Participant in writing pursuant to Article 6 of the Plan as being entitled to receive any benefit payable under the Plan by reason of the death of a Participant, or, in the absence of such designation, the Participant's estate (pursuant to the rules specified in Article 6).

(e) “Board” means the Board of Directors of the Corporation.

(f) “Change in Control” means:

(i) the acquisition by any individual, entity or group (with the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (I) any acquisition directly from the Corporation; (II) any acquisition by the Corporation; (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation; or (IV) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this paragraph; or

(ii) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease during a 12-month period for any reason to constitute a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Corporation Voting Securities; (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination, if such change in the members of the Board was not indorsed by a majority of the members of the Incumbent Board.

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(g) “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

(h) “Committee” means the Human Resources and Compensation Committee of the Board or a delegate of such Committee.

(i) “Compensation” means the remuneration paid or awarded to the Participant by an Employer as Base Salary, Annual Incentive, LTPP Award or Supplemental Income Plan payment.

(j) “Corporation” means HNI Corporation, an Iowa corporation.

(k) “Deferral Election Agreement” means the agreement described in Section 4.2 in which the Participant designates the amount of his or her Compensation, if any, he or she wishes to contribute to the Plan and acknowledges and agrees to the terms of the Plan.

(l) “Elective Deferral” means a contribution to the Plan made by a Participant pursuant to a Deferral Election Agreement the Participant enters into with the Corporation. Elective Deferrals shall be made according to the terms of the Plan set forth in Section 4.2.

(m) “Employer” means the Corporation, any Subsidiary that adopts the Plan, and any entity that continues the Plan as a successor under Section 10.15.

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(n) “Enrollment Period” means the period designated by the Corporation during which a Deferral Election Agreement may be entered into with respect to an eligible member's future Compensation as described in Section 4.2. Generally, the Enrollment Period must end no later than the end of the calendar year before the calendar year in which the services giving rise to the Compensation to be deferred are performed. As described in Section 4.2, an exception may be made to this requirement for individuals who first become eligible to participate in the Plan and for Elective Deferrals from Compensation considered to be Performance-Based Compensation, as determined by the Committee or by the Vice-President, Member and Community Relations, from time to time.

(o) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor thereto.

(p) “Fair Market Value,” of a share of Stock, means the closing price of a share as reported on the New York Stock Exchange on the date as of which such value is being determined, or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem reasonable and within the meaning of Code Section 409A and the regulations thereunder.

(q) “LTPP Award,” of a Participant for a performance period, means the amount payable to the Participant in cash or Stock for the performance period pursuant to the HNI Corporation Long-Term Performance Plan. The performance period for an LTPP Award shall be set forth in the HNI Corporation Long-Term Performance Plan.

(r) “Participant” means an individual who satisfies the requirements of Section 3.1 and who has entered into a Deferral Election Agreement.

(s) “Performance-Based Compensation,” of a Participant for a period, means incentive compensation of the Participant for such period where the amount of, or entitlement to, the incentive compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by not later than 90 days after the commencement of the period of service to which the criteria relate, provided the outcome is substantially uncertain at the time the criteria are established. Performance-based compensation may include payment based on performance criteria not approved by the Board or the Committee or by the stockholders of the Corporation. Performance-based Compensation does not include any amount or portion of any amount that will be paid either regardless of performance or based upon a level of performance that is substantially certain to be met at the time the criteria are established.

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(t) “Plan Year” means the consecutive 12-month period beginning each January 1 and ending December 31.

(u) “Prime Rate” means the prime interest rate published in the Wall Street Journal or its web site as of the first business day coincident with or immediately following the third Monday in January .

(v) “Qualified Domestic Relations Order” has the same meaning as in Section 414(p) of the Code, but without regard to Section 414(p)(9) of the Code.

(w) “Restatement Date” means November 19, 2009.

(x) “Retirement,” of a Participant, means the Participant's Separation from Service on or after the attainment of age 55 with ten years of service with an Employer. The Chief Executive Officer of the Corporation or, with respect to the Chief Executive Officer if the Chief Executive Officer is a Participant, the Committee, in his, her or its discretion, may waive or reduce the ten-year service requirement with respect to a Participant; provided any such waiver or reduction is made before the eligible executive member becomes a Participant or, with respect to each Deferral Election Agreement, before the last day of the Enrollment Period for the Plan Year for which the agreement is made.

(y) “Separation from Service,” of a Participant, means the Participant's separation from service with the Corporation and all of its affiliates, within the meaning of Section 409A(a)(2)(A)(i) of the Code and the regulations thereunder. Solely for these purposes, a Participant will be considered to have a Separation from Service when the Participant dies, retires, or otherwise has a termination of employment with all affiliates. The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months, or if longer, so long as the individual's rights to re-employment with the Corporation or any affiliate is provided either by statute or by contract. If the period of leave exceeds six months and the individual's right to re-employment is not provided either by statute or contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Whether a termination of employment has occurred is based on the facts and circumstances.

(z) “Specified Employee” means a "key employee" (as defined in Section 416(i) of the Code without regard to Section 416(i)(5)) of the Corporation. For purposes hereof, an employee is a key employee if the employee meets the requirements of Section 416(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5)) at any time during the 12-month period ending on December 31. If a person is a key employee as of such date, the person is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following such date.

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(aa) “Subsidiary” means any corporation, joint venture, partnership, limited liability company, unincorporated association or other entity in which the Corporation has a direct or indirect ownership or other equity interest and directly or indirectly owns or controls 50 percent or more of the total combined voting or other decision-making power.

(bb) “Supplemental Income Plan” means the HNI Corporation Supplemental Income Plan, as may be amended from time to time, or any predecessor thereto.

(cc) “Stock” means the Corporation's common stock, $1.00 par value.

(dd) “Stock Unit” means the notational unit representing the right to receive one share of Stock.

2.2 Gender and Number . Except when otherwise indicated by the context, any masculine term used in the Plan also shall include the feminine gender; and the definition of any plural shall include the singular and the singular shall include the plural.

III. ELIGIBILITY AND PARTICIPATION

3.1 Eligibility . Participation in the Plan shall be limited to those executive members of an Employer who are eligible to participate in the HNI Corporation Annual Incentive Plan.

3.2 Participation . An eligible executive member shall be notified of his or her eligibility to make an Elective Deferral under the Plan for a Plan Year prior to the beginning of the Plan Year, or as soon as administratively possible thereafter. Unless so notified, a member shall not have the right to make Elective Deferrals for a Plan Year, whether or not he or she has been permitted to make Elective Deferral for any prior Plan Year.

3.3 Missing Persons . Each Participant and Beneficiary entitled to receive benefits under the Plan shall be obligated to keep the Corporation informed of his or her current address until all Plan benefits due to be paid to the Participant or Beneficiary have been paid to him or her. If, after having made reasonable efforts to do so, the Corporation is unable to locate the Participant or Beneficiary for purposes of making a distribution, the amount of the Participant's benefits under the Plan that would otherwise be considered as nonforfeitable will be forfeited. If the missing Participant or Beneficiary is located after the date of the forfeiture, the benefits for the Participant or Beneficiary will not be reinstated. In no event will a Participant's or Beneficiary's benefits be paid to him or her later than the date otherwise required by the Plan and Code Section 409A.

IV . ESTABLISHMENT AND ENTRIES TO ACCOUNTS

4.1 Accounts . The Committee shall establish two Accounts for each Participant under the Plan as follows:

( a) Cash Account . A Participant's Cash Account, as of any date, shall consist of the Compensation the Participant has elected to allocate to that Account under his or her Deferral Election Agreement(s) pursuant to Section 4.2, increased by earnings thereon pursuant to Section 4.3(a) and reduced by distributions from the Account pursuant to Sections 4.4, 4.5 and 4.6.

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(b) Stock Account . A Participant's Stock Account, as of any date, shall consist of the Compensation the Participant has elected to allocate to that Account under his or her Deferral Election Agreement(s) pursuant to Section 4.2, increased with earnings (including dividend equivalents) thereon and converted to Stock Units pursuant to Section 4.3(b) and reduced by distributions from the Account pursuant to Sections 4.4, 4.5 and 4.6.

The Committee shall establish a separate Sub-Account under each of these Accounts for each Deferral Election Agreement entered into by the Participant pursuant to Section 4.2. As specified in Section 4.2, as part of a Participant's Deferral Election Agreement, the Participant shall elect how amounts deferred under each Deferral Election Agreement are to be distributed to him or her from among the available distribution options described in Section 4.4. The separate Sub-Accounts are established to account for the different distribution terms that may apply to each Sub-Account. The Corporation may combine Sub-Accounts that have identical distribution terms or may establish other Sub-Accounts for a Participant under the Plan from time to time in its discretion, as it deems appropriate or advisable. A Participant shall have a full and immediate nonforfeitable interest in his or her Accounts at all times.

4.2 Deferral Election Agreement . A Participant wishing to make an Elective Deferral under the Plan for a Plan Year shall enter into a Deferral Election Agreement during the Enrollment Period immediately preceding the beginning of the Plan Year. A separate Deferral Election Agreement must be entered into for each Plan Year a Participant wishes to make Elective Deferrals under the Plan. In order to be effective, the Deferral Election Agreement must be completed and submitted to the Committee at the time and in the manner specified by the Committee, which may be no later than the last day of the Enrollment Period. The Committee shall not accept Deferral Election Agreements entered into after the end of the Enrollment Period. The Committee may require that a Participant enter into a separate Deferral Election Agreement for each component of the Participant's Compensation, i.e., Base Compensation, Annual Incentive, LTPP Award and Supplemental Income Plan payment, he or she wishes to defer for a Plan Year. Except as specified in the following two paragraphs, a Deferral Election Agreement will be effective to defer Compensation earned after the Deferral Election Agreement is entered into and not before.

For the Plan Year in which a member first becomes eligible to participate in the Plan, the Committee may, in its discretion, allow the member to enter into a Deferral Election Agreement within 30 days after he or she first becomes eligible. In order to be effective, the Deferral Election Agreement must be completed and submitted to the Committee on or before the 30-day period has elapsed. The Committee shall not accept Deferral Election Agreements entered into after the 30-day period has elapsed. If the member fails to complete a Deferral Election Agreement by such time, he or she may enter into a Deferral Election Agreement during any succeeding Enrollment Period in accordance with the rules described in the preceding paragraph. For Compensation that is earned based upon a specified performance period (for example, the Annual Incentive) where a Deferral Election Agreement is entered into in the first year of eligibility but after the beginning of the performance period, the Deferral Election Agreement will be deemed to apply to Compensation paid for services performed subsequent to the date the Deferral Election Agreement is entered into if the Deferral Election Agreement applies to the portion of the Compensation equal to the total amount of the Compensation for the performance period multiplied by the ratio of the number of days remaining in the performance period after the election over the total number of days in the performance period. For purposes of the exception described in this paragraph, the term "Plan" shall mean the Plan and any other plan required to be aggregated with the Plan pursuant to Code Section 409A, and the regulations and other guidance thereunder. Accordingly, if a member has previously been eligible to participate in a plan required to be aggregated with the Plan, then the 30-day exception described in this paragraph shall not apply to him or her.

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Deferral Election Agreements for Base Salary, incentive compensation (other than Performance-Based Compensation) and Supplemental Income Plan payments shall be completed and submitted to the Corporation at the time described above that is ordinarily applicable to Deferral Election Agreements (subject to the exception for employees who are newly eligible to participate). Deferral Election Agreements for Compensation that is Performance-Based Compensation shall be completed and submitted to the Corporation no later than six months before the end of the performance period for such Compensation. The Committee shall determine from time to time whether an item of incentive compensation is considered Performance-Based Compensation for these purposes.

For each Deferral Election Agreement the Participant enters into, the Participant shall specify:

(a) The percentage of each component of Compensation, i.e., Base Salary, Annual Incentive, LTPP Award or Supplemental Income Plan payment, the Participant wishes to contribute as an Elective Deferral;

(b) The manner (by percentage) in which the amounts in (a), above, are to be allocated between the Participant's Cash Account and Stock Account; provided, however, in the case of Compensation otherwise payable to the Participant in Stock, the Compensation shall automatically be allocated to the Stock Account; and

(c) The time and manner of distribution (consistent with the requirements of Section 4.4) of the Sub-Account established with respect to the Deferral Election Agreement.

The Committee may from time to time establish a minimum amount that may be deferred by a Participant pursuant to this Section 4.2 for any Plan Year.

Elective Deferrals shall be credited to the Participant's Cash Account or Stock Account, as the case may be, as soon as administratively reasonable after the Compensation would have been paid to the Participant had the Participant not elected to defer it under the Plan.

In general, a Deferral Election Agreement shall become irrevocable as of the last day of the Enrollment Period applicable to it. However, if a Participant incurs an "unforeseeable emergency," as defined in Section 4.5(c)(ii), or becomes entitled to receive a hardship distribution pursuant to Treas. Reg. Section 1.401(k)-1(d)(3) after the Deferral Election Agreement otherwise becomes irrevocable, the Deferral Election Agreement shall be cancelled as of the date on which the Participant is determined to have incurred the unforeseeable emergency or becomes eligible to receive the hardship distribution and no further Elective Deferrals will be made under it.

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4.3 Adjustments to Accounts .

(a) The Participant's Cash Account shall be credited with earnings as of the last day of each month. The amount so credited shall be the product of: (i) the Cash Account balance as of such date (less any contributions credited to the Account during the month); and (ii) 1/12 of the sum of (A) the Prime Rate (in effect for the Plan Year) and (B) one percentage point.

(b) The Elective Deferrals allocable to a Participant's Stock Account under a Deferral Election Agreement shall be converted to Stock Units. In the case of Elective Deferrals of Compensation otherwise payable to the Participant in cash, the conversion shall occur on the day (the "conversion date") on which the Elective Deferrals are credited to the Stock Account. On the conversion date, the Elective Deferrals shall be converted to a number of whole and fractional Stock Units determined by dividing the Elective Deferrals (plus earnings) by the Fair Market Value of a share of Stock on the conversion date. In the case of Elective Deferrals of Compensation otherwise payable to the Participant in Stock, the conversion shall occur at the time the Elective Deferrals are credited to the Stock Account pursuant to Section 4.2, with the number of Stock Units so credited equal to the number of shares of Stock otherwise payable to the Participant but for the Deferral Election Agreement. On each date on which the Corporation pays a cash dividend (the "dividend date"), the Stock Account shall be credited with an additional number of Stock Units determined by dividing the dollar amount the Corporation would have paid as a dividend if the Stock Units held in the Participant's Stock Account as of the record date for the dividend were actual shares of Stock divided by the Fair Market Value of a share of Stock on the dividend date. Appropriate adjustments in the Stock Account shall be made as equitably required to prevent dilution or enlargement of the Account from any Stock dividend, Stock split, reorganization or other such corporate transaction or event.

4.4

Commencement and Form of Distribution of Sub-Accounts .

(a) For Plan Years Commencing Before January 1, 2010 . For Elective Deferrals made for Plan Years commencing before January 1, 2010, the following rules set forth in this Section 4.4(a) shall apply. As stated in Section 4.2(c), above, as part of his or her Deferral Election Agreement, a Participant shall elect: (a) the date on which distribution of each Sub-Account established for him or her under the Plan is to commence, which date may be no earlier than December 31 of the Plan Year immediately after the Plan Year in which the Compensation deferred under the Deferral Election Agreement would otherwise have been paid to the Participant; and (b) the form of distribution of each such Sub-Account from the available distribution forms set forth below:

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(1) a single lump-sum payment; or

(2) monthly, quarterly or annual installment payments:

(A) in the case of a Cash Sub-Account,

(i) of a specified dollar amount; or

(ii) over a specified period; and

(B) in the case of a Stock Sub-Account,

(i) of a number of shares of Stock equal to a specified dollar amount;

(ii) of a specified number of shares of Stock; or

(iii) over a specified period.

All distributions from Cash Sub-Accounts shall be paid in the form of cash. All distributions from Stock Sub-Accounts shall be paid in the form of Stock (with each Stock Unit converted to one share of Stock at the time of distribution).

If a Participant elects payment in the form of a lump sum, distribution shall be made to the Participant in a lump sum on the commencement date elected by the Participant.

In the case of a Participant who elects to receive a Sub-Account in the form of installments, earnings and dividends shall be credited to the Participant's Sub-Account in the manner provided in Section 4.3(a) and (b) during the payment period.

If the Participant elects to receive payment of a Sub-Account in the form of annual installments, the initial installment payment shall be made on January 15 of the Plan Year selected by the Participant. The remaining annual installment payments shall be made on January 15 of each year thereafter until the Participant's entire Sub-Account has been paid.

If the Participant elects to receive payment in the form of monthly or quarterly installments, the installment payments shall commence on the first day of the first month or quarter (as the case may be) of the Plan Year selected by the Participant and will continue to be made on the first day of each month or quarter (as the case may be) thereafter until the Participant's entire Sub-Account has been paid.

In the case of a Participant who elects to receive installment payments of a specified dollar amount from a Cash Sub-Account, the amount of each installment payment will equal such specified dollar amount until the Sub-Account is exhausted, with the last installment consisting of the balance in the Sub-Account. In the case of a Participant who elects to receive installment payments of a number of shares of Stock equal to a specified dollar amount, the number of shares to be distributed in each installment payment shall be determined by dividing such specified dollar amount by the Fair Market Value of a share of Stock on the distribution date, with the last installment consisting of the balance in the Sub-Account.

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In the case of a Participant who elects to receive installment payments over a specified period from a Cash Sub-Account or Stock Sub-Account, the amount of each installment payment shall be equal to the cash balance or number of Stock Units (as the case may be) in the Participant's Sub-Account immediately prior to the installment payment, multiplied by a fraction, the numerator of which is one, and the denominator of which is the number of installment payments remaining, with the last installment consisting of the balance of the Participant's Sub-Account.

In the case of a Participant who elects to receive installment payments from a Stock-Sub-Account equal to a specified number of shares, each installment payment shall consist of such specified number, with the last installment consisting of the balance of the Participant's Sub-Account.

Notwithstanding anything in this Section 4.4(a) to the contrary, a Participant who elects to receive a Sub-Account in installments must elect a payment amount that results in a total annual Plan payment from all Sub-Accounts (of cash, Stock or both) equaling at least $25,000. If, on January 15 of a Plan Year, the balance of a Participant's Sub-Account then being distributed in the form of monthly or quarterly installments is less than $25,000, the entire balance will be paid to the Participant in a single sum on such date. In any event, the remaining balance of a Participant's Account shall be paid on the 25th anniversary of the first payment.

A Participant may modify an election for payment of a Sub-Account to postpone the commencement date or change the method of payment to another method permitted under the Plan. In order to be effective, the requested modification must: (a) be in writing and be submitted to the Corporation at the time and in the manner specified by the Committee; (b) not take effect for at least 12 months from the date on which it is submitted to the Corporation; (c) be submitted to the Corporation at least 12 months prior to the then scheduled distribution commencement date ("original distribution date"); and (d) specify a new distribution commencement date no earlier than five years after the original distribution date. For purposes hereof, if the original distribution date is a Plan Year rather than a specified date within a Plan Year, the original distribution date shall be deemed to be the first day of the Plan Year.

(b) For Plan Years Commencing On or After January 1, 2010 . For Elective Deferrals made for Plan Years commencing on or after January 1, 2010, the rules set forth in this Section 4.4(b) shall apply. As part of his or her Deferral Election Agreement, a Participant shall elect: (i) the Plan Year in which distribution of each Sub-Account established for him or her under the Plan is to commence, which date may be no earlier than the third Monday in January immediately after the end of the first Plan Year following the Plan Year in which the Compensation deferred under the Deferral Election Agreement would otherwise have been paid to the Participant; and (ii) the method of distribution of each such Sub-Account from the available distribution methods set forth below:

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(1) a single lump-sum payment, or

(2) annual installments over a number, not to exceed 15, of years specified by the Participant.

If a Participant elects a Sub-Account in the form of a lump sum, distribution shall be made to the Participant in a lump sum on the third Monday in January of the Plan Year elected by the Participant.

If a Participant elects to receive a Sub-Account in the form of installments, the initial installment payment shall be made on the third Monday in January of the Plan Year elected by the Participant for benefit commencement. The remaining annual installment payments shall be made on each anniversary of the commencement date during the payment period elected by the Participant. The amount of each installment payment shall be equal to the cash balance or number of Stock Units (as the case may be) in the Participant's Sub-Account immediately prior to the installment payment, multiplied by a fraction, the numerator of which is one, and the denominator of which is the number of installment payments remaining, with the last installment consisting of the balance of the Participant's Sub-Account. Earnings and dividends shall be credited to the Participant's Sub-Account in the manner provided in Section 4.3(a) and (b) during the payment period.

If at any time the present value of any benefit under the Plan that would be considered a "single plan" under Treasury Regulation Section 1.409A-1(c)(2) together with the present value of any benefit required to be aggregated with such benefit under Treasury Regulation Section 1.409A-1(c)(2), is less than the dollar limit set forth in Section 402(g)(1)(B) of the Code, the Corporation may, in its discretion, distribute such benefit (or benefits) to the Participant in the form of a single lump sum, provided the payment results in the liquidation of the entirety of the Participant's interest under the "single plan," including all benefits required to be aggregated as part of the "single plan" under Treasury Regulation Section 1.409A-1(c)(2), and provided further the Corporation evidences its exercise of such discretion in writing no later than the date of such payment.

A Participant may modify an election for payment of a Sub-Account to postpone the commencement date or change the method of payment to another method permitted under the Plan. In order to be effective, the requested modification must: (a) be in writing and be submitted to the Committee at the time and in the manner specified by the Committee; (b) not take effect for at least 12 months from the date on which it is submitted to the Committee; (c) be submitted to the Committee at least 12 months prior to the then scheduled distribution commencement date ("original distribution date"); and (d) specify a new distribution commencement date no earlier than five years after the original distribution date. For purposes hereof, if the original distribution date is a Plan Year rather than a specified date within a Plan Year, the original distribution date shall be deemed to be the first day of the Plan Year.

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4.5 Exceptions to Payment Terms . Notwithstanding anything in this Article 4 or a Participant's Deferral Election Agreement (as may be modified pursuant to Section 4.4) to the contrary, the following terms, if applicable, shall apply to the payment of a Participant's Sub-Accounts.

(a) Separation from Service for Reasons Other than Retirement or Death . If a Participant has a Separation from Service for reasons other than Retirement or death, all of the Participant's Sub-Accounts (or the remaining balances thereof if distribution has already commenced) will be distributed to him or her in a single sum (regardless of the form otherwise elected by the Participant) within 90 days following the Participant's Separation from Service. If the Participant has a Separation from Service due to death, the rules set forth in Section 4.6 shall apply.

(b) Delay in Distributions .

(i) If the Participant is a Specified Employee, any Plan distributions that are otherwise to commence on the Participant's Separation from Service shall commence on the date immediately following the six-month anniversary of the Separation from Service or, if earlier, on the date of the Participant's death. In this case, the first payment following the period of delay required by this Section 4.5(b)(i) shall be increased by any amount that would otherwise have been payable to the Participant under the Plan during the delay period.

(ii) The Corporation shall delay the distribution of any amount otherwise required to be distributed under the Plan if, and to the extent that, the Corporation reasonably anticipates the Corporation's deduction with respect to such distribution otherwise would be limited or eliminated by application of Code Section 162(m). In such event, (A) if any payment is delayed during any year on account of Code Section 162(m), then all payments that could be delayed on account of Code Section 162(m) during such year must also be delayed; (B) such delayed payments must be paid either (1) in the first year in which the Corporation reasonably anticipates the payment to be deductible, or (2) the period beginning on the date of the Participant's Separation from Service and ending on the later of the end of the Participant's year of separation or the fifteenth (15th) day of the third month after such separation; and (C) if payment is delayed to the date of Separation from Service with respect to a Participant who is a Specified Employee, such payment shall commence on the date immediately following the six-month anniversary of the Separation from Service, or if earlier, on the date of the Participant's death.

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(iii) The Corporation shall delay the distribution of any amount otherwise required to be distributed under the Plan if, and to the extent that, the Corporation reasonably anticipates the making of the distribution would violate Federal securities laws or other applicable law. In such event, the distribution will be made at the earliest date on which the Corporation reasonably anticipates the making of the distribution will not cause such a violation.

(c) Acceleration of Distributions . All or a portion of a Participant's Sub-Accounts may be distributed at an earlier time and in a different form than specified in this Article 4:

(i) As may be necessary to fulfill a Qualified Domestic Relations Order or as specified in Section 1.409A-3(j)(4)(3) of the Treasury Regulations. Distributions pursuant to a Qualified Domestic Relations Order shall be made according to administrative procedures established by the Corporation.

(ii) If the Participant has an unforeseeable emergency. For these purposes an "unforeseeable emergency" is a severe financial hardship of the Participant resulting from an illness or accident of the Participant or the Participant's spouse, Beneficiary or dependent (as defined in Section 152(a) of the Code, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant's primary residence may constitute an unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for funeral expenses of a spouse, Beneficiary or a dependent (as defined in Section 152(a) of the Code, without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)) may also constitute an unforeseeable emergency. Except as otherwise provided in this paragraph (c)(ii), the purchase of a home and the payment of college tuition are not unforeseeable emergencies. Whether a Participant is faced with an unforeseeable emergency permitting a distribution under this paragraph (c)(ii) is to be determined based on the relevant facts and circumstances of each case, but, in any case a distribution on account of an unforeseeable emergency may not be made to the extent such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Elective Deferrals.

Distributions because of an unforeseeable emergency must be limited to the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution). Determinations of the amounts reasonably necessary to satisfy the emergency need must take into account any additional compensation available due to the Participant's cancellation of a Deferral Election Agreement due to an unforeseeable emergency pursuant to Section 4.2. However, the determination of amounts reasonably necessary to satisfy the emergency need is not required to take into account any additional compensation that, due to the unforeseeable emergency, is available under another nonqualified deferred compensation plan but has not actually been paid.

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(iii) Due to a failure of the Plan to satisfy Section 409A with respect to the Participant, but only to the extent an amount is required to be included in the Participant's income as a result of such failure.

(iv) For Elective Deferrals made for Plan Years commencing on or after January 1, 2010, in the event of a Change in Control, in which case the Participant's Account shall be distributed to him or her in a lump sum within 90 days after the date on which the Change in Control occurs.

4.6 Death Benefit . If a Participant dies with all or a portion of his or her Account unpaid, the Account shall be paid to his or her Beneficiary, as designated in accordance with Article 6, in the form (single lump sum or installments) and time elected by the Participant under Sections 4.2 and 4.4, subject to Section 4.5 and Article 8. Notwithstanding the preceding sentence, for Elective Deferrals made for Plan Years beginning on or after January 1, 2010, if a Participant dies with all or a portion of his or her Account unpaid, the Account shall be paid to his or her Beneficiary, as designated in accordance with Article 6, in the form of a single lump sum, with distribution commencing to the Beneficiary within 90 days following the date of the Participant's death.

4.7 Funding . An Employer's obligations under the Plan shall in every case be an unfunded and unsecured promise to pay. Each Participant's or Beneficiary's rights under the Plan shall be no greater than those of a general, unsecured creditor of an Employer. The amount of each Participant's Account shall be reflected on the accounting records of the Corporation but shall not be construed to create, or require the creation of, a trust, custodial or escrow account. No Participant shall have any right, title, or interest whatsoever in or to any investment reserves, accounts or funds an Employer may purchase, establish, or accumulate, and, except as provided in Section 8.1, no Plan provision or action taken pursuant to the Plan shall create or be construed to create a trust or a fiduciary relationship of any kind between an Employer and a Participant or any other person. All amounts paid under the Plan shall be paid in cash or Stock from the general assets of an Employer, and an Employer shall not be obligated under any circumstances to fund its financial obligations under the Plan. The Corporation may create a trust to hold funds or securities to be used in payment of its obligation under the Plan, and may fund such trust; provided, however, any funds contained therein shall remain liable to the claims of the Corporation's general creditors.

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V . ADMINISTRATION

5.1 Administration . The Plan shall be administered by the Committee. In addition to the other powers granted under the Plan, the Committee shall have all powers necessary to administer the Plan, including, without limitation, powers:

(a) to interpret the provisions of the Plan;

(b) to establish and revise the method of accounting for the Plan and to maintain the Accounts; and

5.2 Actions of the Committee . The Committee (including any person or entity to whom the Committee has delegated duties, responsibilities or authority, to the extent of such delegation) has total and complete discretionary authority to determine conclusively for all parties all questions arising in the administration of the Plan, to interpret and construe the terms of the Plan and to determine all questions of eligibility and status of members, Participants and Beneficiaries under the Plan and their respective interests. Subject to the claims procedures of Article 9, all determinations, interpretations, rules and decisions of the Committee (including those made or established by any person or entity to whom the Committee has delegated duties, responsibilities or authority, if made or established pursuant to such delegation) are conclusive and binding upon all persons having or claiming to have any interest or right under the Plan.

5.3 Delegation . The Committee, or any officer or other member of the Corporation designated by the Committee, shall have the power to delegate specific duties and responsibilities to officers or other members of the Corporation or other individuals or entities. Any delegation may be rescinded by the Committee at any time. Each person or entity to whom a duty or responsibility has been delegated shall be responsible for the exercise of such duty or responsibility and shall not be responsible for any act or failure to act of any other person or entity.

5.4 Expenses . The expenses of administering the Plan shall be borne by the Corporation.

5.5 Reports and Records . The Committee, and those to whom the Committee has delegated duties under the Plan, shall keep records of all their proceedings and actions and shall maintain books of account, records and other data as shall be necessary for the proper administration of the Plan and for compliance with applicable law.

5.6 Valuation of Accounts and Account Statements . As of each valuation date, the Committee shall adjust the previous Account balances of each Participant for Elective Deferrals, distributions and investment gains and losses. A "valuation date," for these purposes, is the last day of each calendar quarter, and such other dates as the Committee may designate from time to time in its discretion. The Committee shall provide each Participant with a statement of his or her Account balances on a quarterly basis.

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5.7 Indemnification and Exculpation . The agents, officers, directors and members of the Corporation and its Subsidiaries and the Committee shall be indemnified and held harmless by the Corporation against and from any and all loss, cost, liability or expense that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit or proceeding to which they may be a party or in which they may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by them in settlement (with the Corporation's written approval) or paid by them in satisfaction of a judgment in any such action, suit or proceeding. The foregoing provision shall not be applicable to any person if the loss, cost, liability or expense is due to such person's gross negligence or willful misconduct.

VI. BENEFICIARY DESIGNATION

6.1 Designation of Beneficiary . Each Participant shall be entitled to designate a Beneficiary or Beneficiaries who, upon the Participant's death, will receive the amounts that otherwise would have been paid to the Participant under the Plan. All designations shall be signed by the Participant and shall be in a form prescribed by the Committee. The Participant may change his or her designation of Beneficiary at any time, on a form prescribed by the Committee. The filing of a new Beneficiary designation form by a Participant shall automatically revoke all prior designations by that Participant.

6.2 Death of Beneficiary . In the event all the Beneficiaries named by a Participant pursuant to Section 6.1 predecease the Participant, the amounts that would have been paid to the Participant under the Plan shall be paid to the Participant's estate.

6.3 Ineffective Designation . In the event the Participant does not designate a Beneficiary, or for any reason such designation is ineffective in whole or in part, the ineffectively designated amounts shall be paid to the Participant's estate.

VII. WITHHOLDING

The Corporation shall reduce the amount of any cash payment under the Plan and an Employer may reduce the amount of any other compensation payable to a Participant to the extent the Corporation or Employer deems appropriate for Federal, state or local tax withholding or other purposes required by law. The Corporation shall reduce the amount of any Stock payment under the Plan to the extent the Corporation deems appropriate for Federal, state or local tax withholding, based upon the supplemental wage withholding rate, or for other purposes required by law.

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VIII. CHANGE IN CONTROL, AMENDMENT, AND TERMINATION

8.1 Change in Control . The provisions of this Section 8.1 shall apply to Elective Deferrals made for Plan Years commencing before January 1, 2010.

(a) Retention of Plan Benefits . A Participant shall retain rights to payment of all amounts credited to his or her Accounts under the Plan, including earnings pursuant to Section 4.3, in the event of a Change in Control.

(b) Contributions to Trust . Notwithstanding anything in Section 4.7 to the contrary, the Corporation shall be obligated not later than upon the occurrence of a Change in Control, to transfer assets to one or more irrevocable grantor trusts established by the Corporation in an amount at least sufficient to provide for the obligations of the Employers under the Plan as of the date of such transfer. The assets of any such trust shall at all times be subject to the claims of the general unsecured creditors of the Employers and not be subject to the prior claim of any Participant or Beneficiary under the Plan. Any such trust so established and the rights and obligations of any individual, the Employers, and the trustee in such trust shall be governed exclusively by such trust; provided the provisions of the Plan shall govern exclusively the rights of a Participant or Beneficiary to benefits under the Plan.

8.2 Plan Amendment and Termination . The Board or the Committee has the authority to amend, modify, and/or terminate the Plan at any time. No amendment or termination of the Plan shall in any manner reduce the Account balance of any Participant without the consent of the Participant (or if the Participant has died, his or her Beneficiary). Without limiting the foregoing, the Board may, in its sole discretion: (a) freeze the Plan by precluding any further Elective Deferrals and/or other credits, but otherwise maintain the balance of the provisions of the Plan; or (b) terminate the Plan in its entirety and distribute the Participant's Accounts at an earlier date and in a different form than otherwise provided under the Plan, provided such termination and distribution comply with the requirements of Section 409A of the Code.

IX. CLAIMS PROCEDURE

The Committee shall notify a Participant in writing within 90 days of the Participant's written application for benefits of the Participant's eligibility or non-eligibility for benefits under the Plan; provided, however, benefit distribution shall not be contingent upon a Participant's application for benefits. If the Committee determines a Participant is not eligible for benefits or full benefits, the notice shall set forth: (a) the specific reasons for such denial; (b) a specific reference to the provision of the Plan on which the denial is based; (c) a description of any additional information or material necessary for the Participant to perfect the claim, and a description of why it is needed; and (d) an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Committee determines there are special circumstances requiring additional time to make a decision, the Committee shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90-day period. If a Participant is determined by the Committee to be not eligible for benefits, or if a Participant believes he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have the Participant's claim reviewed by the Committee by filing a petition for review with the Committee within 60 days after receipt by the Participant of the notice issued by the Committee. The petition shall state the specific reasons the Participant believes the Participant is entitled to benefits or greater or different benefits. Within 60 days after receipt by the Committee of the petition, the Committee shall afford the Participant (and the Participant's counsel, if any) an opportunity to present the Participant's position to the Committee orally or in writing, and the Participant (or counsel) shall have the right to review the pertinent documents, and the Committee shall notify the Participant of its decision in writing within the 60-day period, stating specifically the basis of the decision written in a manner calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Committee, but notice of this deferral shall be given to the Participant. If a Participant does not appeal on time, the Participant will lose the right to appeal the denial and the right to file suit under ERISA, and the Participant will have failed to exhaust the Plan's internal administrative appeal process, which is generally a prerequisite to bringing suit. In the event an appeal of a denial of a claim for benefits is denied, any lawsuit to challenge the denial of such claim must be brought within one year of the date the Committee has rendered a final decision on the appeal.

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In the case of a Participant's death, the same procedures shall apply to the Beneficiary.

X. MISCELLANEOUS

10.1 Rights as Stockholder . No person shall have any right as a stockholder of the Corporation with respect to any shares of Stock or other equity security of the Corporation payable under the Plan unless and until such person becomes a stockholder of record with respect to such shares or equity security.

10.2 Governing Law . The Plan and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Iowa and construed in accordance therewith without giving effect to principles of conflicts of laws.

10.3 No Limit on Compensation Plans or Arrangements . Nothing contained in the Plan shall prevent the Corporation or a Subsidiary from adopting or continuing in effect other or additional compensation plans or arrangements.

10.4 No Right to Employment . Neither the adoption and maintenance of the Plan nor the execution by the Corporation of a Deferral Election Agreement with any Participant shall be construed as giving a Participant the right to be retained as a member of the Corporation or any Subsidiary, nor will it affect in any way the right of the Corporation or a Subsidiary to terminate a Participant's employment at any time, with or without cause. In addition, the Corporation or a Subsidiary may at any time dismiss a Participant from employment free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan.

10.5 Severability . If any provision of the Plan or any Deferral Election Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Deferral Election Agreement under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Board, materially altering the purpose or intent of the Plan or the Deferral Election Agreement, such provision shall be stricken as to such jurisdiction or Deferral Election Agreement, and the remainder of the Plan or any such Deferral Election Agreement shall remain in full force and effect.

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10.6 Securities Matters . The Corporation shall not be required to deliver any share of Stock until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

10.7 No Fractional Shares . No fractional shares of Stock shall be issued or delivered pursuant to the Plan. Any fractional share otherwise payable under the Plan shall be settled in the form of cash.

10.8 Headings . Headings are given to the Articles, Sections and Subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

10.9 Nontransferability . No benefit payable at any time under the Plan will be subject in any manner to alienation, sale, transfer, assignment, pledge, levy, attachment or encumbrance of any kind.

10.10 Unfunded Plan . The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group of management or highly compensated employees" within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and therefore is further intended to be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA.

10.11 No Other Agreements . The terms and conditions set forth herein constitute the entire understanding of the Corporation, the Subsidiaries and the Participants with respect to the matters addressed herein.

10.12 Incapacity . In the event any Participant is unable to care for his or her affairs because of illness or accident, any payment due may be paid to the Participant's spouse, parent, brother, sister, adult child or other person deemed by the Corporation to have incurred expenses for the care of the Participant, unless a duly qualified guardian or other legal representative has been appointed.

10.13 Release . Any payment of benefits to or for the benefit of a Participant made in good faith by the Corporation in accordance with the Corporation's interpretation of its obligations hereunder, shall be in full satisfaction of all claims against the Corporation and all Subsidiaries for benefits under the Plan to the extent of such payment.

10.14 Notices . Any notice permitted or required under the Plan shall be in writing and shall be hand delivered or sent, postage prepaid, by first class mail, or by certified or registered mail with return receipt requested, to the Committee, if to the Corporation, or to the address last shown on the records of the Corporation, if to a Participant. Any such notice shall be effective as of the date of hand delivery or mailing.

10.15 Successors . All obligations of the Corporation under the Plan shall be binding upon and inure to the benefit of any successor to the Corporation, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business or assets of the Corporation.

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Exhibit 10.15

HNI CORPORATION

DIRECTORS DEFERRED COMPENSATION PLAN

As Amended and Restated Effective November 19, 2009

TABLE OF CONTENTS

			Page

I.	AMENDMENT AND RESTATEMENT		1
	1.1	Amendment and Restatement.	1
	1.2	Purpose	1
	1.3	Application of the Plan.	1

II.	DEFINITIONS		1
	2.1	Definitions.	1
	2.2	Gender and Number	5

III.	ELIGIBILITY AND PARTICIPATION		5
	3.1	Eligibility	5
	3.2	Missing Persons	5

IV .	ESTABLISHMENT AND ENTRIES TO ACCOUNTS		5
	4.1	Accounts	5
	4.2	Deferral Election Agreement	6
	4.3	Adjustments to Accounts	7
	4.4	Commencement and Form of Distribution of Sub-Accounts	7
	4.5	Exceptions to Payment Terms	8
	4.6	Death Benefit	11
	4.7	Funding	11

V .	ADMINISTRATION		12
	5.1	Administration	12
	5.2	Actions of the Committee	12
	5.3	Delegation	12
	5.4	Expenses	12
	5.5	Reports and Records	12
	5.6	Valuation of Accounts and Account Statements	13
	5.7	Indemnification and Exculpation	13

VI.	BENEFICIARY DESIGNATION		13
	6.1	Designation of Beneficiary	13
	6.2	Death of Beneficiary	13
	6.3	Ineffective Designation	13

VII.	AMENDMENT AND TERMINATION		13

VIII.	CLAIMS PROCEDURE		14

IX.	MISCELLANEOUS		14
	9.1	Rights as a Stockholder	14
	9.2	Governing Law	15
	9.3	No Limit on Compensation Plans or Arrangements	15
	9.4	No Right to Remain a Director	15
	9.5	Severability	15
	9.6	Securities Matters	15
	9.7	No Fractional Shares	15
	9.8	Headings	15
	9.9	Nontransferability	15
	9.10	Unfunded Plan	15
	9.11	No Other Agreements	16
	9.12	Incapacity	16
	9.13	Release	16
	9.14	Notices	16
	9.15	Successors	16

HNI CORPORATION

DIRECTORS DEFERRED COMPENSATION PLAN

I. AMENDMENT AND RESTATEMENT

1.1 Amendment and Restatement . HNI Corporation, an Iowa corporation (the "Corporation"), established this HNI Corporation Directors Deferred Compensation Plan (the "Plan"), effective August 9, 1999. The Corporation has amended and restated the Plan from time to time, most recently effective January 1, 2005. The Corporation hereby again amends and restates the Plan, effective November 19, 2009 (the "Restatement Date"), to accomplish certain changes to its form and operation.

1.2 Purpose . The purpose of the Plan is to give Outside Directors the opportunity to defer the receipt of fees payable to them by the Corporation to achieve their personal financial planning goals.

II. DEFINITIONS

2.1 Definitions . Whenever used in the Plan, the following terms shall have the meaning set forth below and, when the defined meaning is intended, the term is capitalized:

(b) “Beneficiary” means the persons or entities designated by a Participant in writing pursuant to Article 6 of the Plan as being entitled to receive any benefit payable under the Plan by reason of the death of a Participant, or, in the absence of such designation, the Participant's estate (pursuant to the rules specified in Article 6).

(d) “Change in Control” means:

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(e) “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

(f) “Committee” means the Human Resources and Compensation Committee of the Board or a delegate of such Committee.

(g) “Compensation,” of a Participant, means the Participant's annual retainer, meeting fees (if any) and any other amounts payable to the Participant by the Corporation for services performed as an Outside Director, in cash or Stock, excluding any amounts distributable under the Plan.

(h) “Corporation” means HNI Corporation, an Iowa corporation.

(i) “Deferral Election Agreement” means the agreement described in Section 4.2 in which the Participant designates the amount of his or her Compensation, if any, he or she wishes to contribute to the Plan and acknowledges and agrees to the terms of the Plan.

(j) “Elective Deferral” means a contribution to the Plan made by a Participant pursuant to a Deferral Election Agreement the Participant enters into with the Corporation. Elective Deferrals shall be made according to the terms of the Plan set forth in Section 4.2.

(k) “Enrollment Period” means the period designated by the Corporation during which a Deferral Election Agreement may be entered into with respect to an eligible employee's future Compensation as described in Section 4.2. Generally, the Enrollment Period must end no later than the end of the calendar year before the calendar year in which the services giving rise to the Compensation to be deferred are performed. As described in Section 4.2, an exception may be made to this requirement for individuals who first become eligible to participate in the Plan.

(l) “Fair Market Value,” of a share of Stock, means the closing price of the share as reported on the New York Stock Exchange on the date as of which such value is being determined, or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate.

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(m) “Outside Director” means a non-employee member of the Board.

(n) “Participant” means an Outside Director who has entered into a Deferral Election Agreement.

(o) “Plan Year” means the consecutive 12-month period beginning each January 1 and ending December 31.

(p) “Prime Rate” means the prime interest rate published in the Wall Street Journal or its web site as of the first business day coincident with or immediately following the third Monday in January .

(q) “Qualified Domestic Relations Order” has the same meaning as in Section 414(p) of the Code, but without regard to Section 414(p)(9) of the Code.

(r) “Restatement Date” means November 19, 2009, 2009.

(s) “Retirement,” of a Participant, means the Participant's Separation from Service on or after the attainment of age 55 with at least ten years of service as a Board member. The Chairman of the Board or, with respect to the Chairman if the Chairman is a Participant, the Committee, in his, her or its discretion, may waive or reduce the ten-year service requirement with respect to a Participant; provided that any such waiver or reduction is made before the Outside Director becomes a Participant or, with respect to each Deferral Election Agreement, before the last day of the Enrollment Period for the Plan Year for which the agreement is made.

(t) “Separation from Service,” with respect to a Participant, has the meaning set forth in Treasury Regulation Section 1.409A-1(h), or any subsequent authority.

(u) “Specified Employee” means a "key employee" (as defined in Section 416(i) of the Code without regard to Section 416(i)(5)) of the Corporation. For purposes hereof, an employee is a key employee if the employee meets the requirements of Section 416(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5)) at any time during the 12-month period ending on December 31. If a person is a key employee as of such date, the person is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following such date.

(v) “Stock” means the Corporation's common stock, $1.00 par value.

(w) “Stock Unit” means the notational unit representing the right to receive one share of Stock.

(x) “Subsidiary” means any corporation, joint venture, partnership, limited liability company, unincorporated association or other entity in which the Corporation has a direct or indirect ownership or other equity interest and directly or indirectly owns or controls 50 percent or more of the total combined voting or other decision-making power.

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III. ELIGIBILITY AND PARTICIPATION

3.1 Eligibility . Participation in the Plan shall be limited to Outside Directors.

3.2 Missing Persons . Each Participant and Beneficiary entitled to receive benefits under the Plan shall be obligated to keep the Corporation informed of his or her current address until all Plan benefits due to be paid to the Participant or Beneficiary have been paid to him or her. If, after having made reasonable efforts to do so, the Corporation is unable to locate the Participant or Beneficiary for purposes of making a distribution, the amount of the Participant's benefits under the Plan that would otherwise be considered as nonforfeitable will be forfeited. If the missing Participant or Beneficiary is located after the date of the forfeiture, the benefits for the Participant or Beneficiary will not be reinstated. In no event will a Participant's or Beneficiary's benefits be paid to him or her later than the date otherwise required by the Plan and Code Section 409A.

IV . ESTABLISHMENT AND ENTRIES TO ACCOUNTS

4.1 Accounts . The Committee shall establish two Accounts for each Participant under the Plan as follows:

(a) Cash Account . A Participant's Cash Account, as of any date, shall consist of the Compensation the Participant has elected to allocate to that Account under his or her Deferral Election Agreement(s) pursuant to Section 4.2, increased by earnings thereon pursuant to Section 4.3(a) and reduced by distributions from the Account pursuant to Sections 4.4, 4.5 and 4.6.

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For the Plan Year in which an individual first becomes an Outside Director, the Committee may, in its discretion, allow the Outside Director to enter into a Deferral Election Agreement within 30 days after he or she first becomes an Outside Director. In order to be effective, the Deferral Election Agreement must be completed and submitted to the Committee on or before the 30-day period has elapsed. The Committee will not accept Deferral Election Agreements entered into after the 30-day period has elapsed. If the Outside Director fails to complete a Deferral Election Agreement by such time, he or she may enter into a Deferral Election Agreement during any succeeding Enrollment Period in accordance with the rules described in the preceding paragraph. For purposes of the exception described in this paragraph, the term "Plan" means the Plan and any other plan required to be aggregated with the Plan pursuant to Code Section 409A, and the regulations and other guidance thereunder. Accordingly, if an Outside Director has previously been eligible to participate in a plan required to be aggregated with the Plan, then the 30-day exception described in this paragraph shall not apply to him or her.

For each Deferral Election Agreement the Participant enters into, the Participant shall specify:

(a) The percentage of Compensation the Participant wishes to contribute as an Elective Deferral;

(b) The manner (by percentage) in which the amount in (a), above, is to be allocated between the Participant's Cash Account and Stock Account; provided, however, in the case of Compensation otherwise payable to the Participant in Stock, the Compensation shall automatically be allocated to the Stock Account; and

(c) The time and manner of distribution (consistent with the requirements of Section 4.4) of the Sub-Account established with respect to the Deferral Election Agreement.

The Committee may from time to time establish a minimum amount that may be deferred by a Participant pursuant to this Section 4.2 for any Plan Year.

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In general, a Deferral Election Agreement shall become irrevocable as of the last day of the Enrollment Period applicable to it. However, if a Participant incurs an "unforeseeable emergency," as defined in Section 4.5(d)(ii) after the Deferral Election Agreement otherwise becomes irrevocable, the Deferral Election Agreement shall be cancelled as of the date on which the Participant is determined to have incurred the unforeseeable emergency and no further Elective Deferrals will be made under it.

4.3 Adjustments to Accounts .

4.4 Commencement and Form of Distribution of Sub-Accounts . As stated in Section 4.2(c), above, as part of his or her Deferral Election Agreement, a Participant shall elect: (a) the date on (or, in the case of Elective Deferrals made for Plan Years commencing on or after January 1, 2010, the Plan Year in) which distribution of each Sub-Account established for him or her under the Plan is to commence, which date may be no earlier than December 31 of the Plan Year immediately after the Plan Year in which the Compensation deferred under the Deferral Election Agreement would otherwise have been paid to the Participant; provided, however, for Elective Deferrals made for Plan Years commencing on or after January 1, 2010, the date may be no earlier than the third Monday in January immediately after the end of the first Plan Year following the Plan Year in which the Compensation deferred under the Deferral Election Agreement would otherwise have been paid to the Participant; and (b) the form of distribution of each such Sub-Account from the available distribution forms set forth below:

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(a) a single lump-sum payment, or

(b) annual installments over a number, not to exceed 15, of years specified by the Participant.

If a Participant elects payment in the form of a single lump sum, distribution shall be made to the Participant in a single lump sum on the commencement date elected by the Participant; provided, however, for Plan Years commencing on or after January 1, 2010, distribution will be made on the third Monday in January of the Plan Year elected by the Participant.

If the Participant elects payment in the form of annual installments, the initial installment payment shall be made on the commencement date elected by the Participant; provided, however, for Elective Deferrals made for Plan Years commencing on or after January 1, 2010, the initial installment shall be made on the third Monday in January of the Plan Year elected by the Participant for benefit commencement. The remaining annual installment payments shall be made on each anniversary of the commencement date during the payment period elected by the Participant. The amount of each installment payment shall be equal to the cash balance or number of Stock Units (as the case may be) in the Participant's Sub-Account immediately prior to the installment payment, multiplied by a fraction, the numerator of which is one, and the denominator of which is the number of installment payments remaining, with the last installment consisting of the balance of the Participant's Sub-Account. Earnings and dividends shall be credited to the Participant's Sub-Account in the manner provided in Section 4.3(a) and (b) during the payment period.

A Participant may modify an election for payment of a Sub-Account to postpone the commencement date and change the form of payment to another form permitted under the Plan. In order to be effective, the requested modification must: (a) be in writing and be submitted to the Corporation at the time and in the manner specified by the Committee; (b) not take effect for at least 12 months from the date on which it is submitted to the Committee; (c) be submitted to the Committee at least 12 months prior to the then scheduled distribution commencement date ("original distribution date"); and (d) specify a new distribution commencement date that is no earlier than five years after the original distribution date. For purposes hereof, if the original distribution date is a Plan Year rather than a specified date within a Plan Year, the original distribution date shall be deemed to be the first day of the Plan Year.

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(a) Separation from Service before Scheduled Distribution Commencement Date .

(i) For Plan Years Commencing Before January 1, 2010 . For Elective Deferrals made for Plan Years commencing before January 1, 2010, the rules set forth in this Section 4.5(a)(i) shall apply. If a Participant has a Separation from Service for any reason, including death or disability, before the date on which distribution of a Sub-Account is scheduled to commence, distribution of the Sub-Account will commence within 90 days after the date on which the Separation from Service occurs. Except as specified in paragraph (b) of this Section 4.5 and Article 7, distribution will be made in the same form (i.e., lump sum or installments, and if installments, over the same period) as elected by the Participant in his or her Deferral Election Agreement (as may be modified pursuant to the last paragraph of Section 4.4).

(ii) For Plan Years Commencing On or After January 1, 2010 . For Elective Deferrals made for Plan Years commencing on or after January 1, 2010, the rules set forth in this Section 4.5(a)(ii) shall apply. If a Participant has a Separation from Service for any reason other than Retirement before the date on which distribution of a Sub-Account is scheduled to commence, distribution of the Sub-Account will be made in a single lump sum within 90 days after the date on which the Separation from Service occurs.

(b) Small Payments . If at any time the present value of any benefit under the Plan that would be considered a "single plan" under Treasury Regulation Section 1.409A-1(c)(2) together with the present value of any benefit required to be aggregated with such benefit under Treasury Regulation Section 1.409A-1(c)(2), is less than the dollar limit set forth in Section 402(g)(1)(B) of the Code, the Corporation may, in its discretion, distribute such benefit (or benefits) to the Participant in the form of a single lump sum, provided that the payment results in the liquidation of the entirety of the Participant's interest under the "single plan," including all benefits required to be aggregated as part of the "single plan" under Treasury Regulation Section 1.409A-1(c)(2), and provided further the Corporation evidences its exercise of such discretion in writing no later than the date of such payment.

(i) If the Participant is a Specified Employee, any Plan distributions that are otherwise to commence on the Participant's Separation from Service shall commence on the date immediately following the six-month anniversary of the Separation from Service or, if earlier, on the date of the Participant's death. In this case, the first payment following the period of delay required by this Section 4.5(c)(i) shall be increased by any amount that would otherwise have been payable to the Participant under the Plan during the delay period.

(ii) The Corporation shall delay the distribution of any amount otherwise required to be distributed under the Plan if, and to the extent that, the Corporation reasonably anticipates the Corporation's deduction with respect to such distribution otherwise would be limited or eliminated by application of Section 162(m) of the Code. In such event, (A) if any payment is delayed during any year on account of Code Section 162(m), then all payments that could be delayed on account of Code Section 162(m) during such year must also be delayed; (B) such delayed payments must be paid either (1) in the first year in which the Corporation reasonably anticipates the payment to be deductible, or (2) the period beginning on the date of the Participant's Separation from Service and ending on the later of the end of the Participant's year of separation or the fifteenth (15th) day of the third month after such separation; and (C) if payment is delayed to the date of Separation from Service with respect to a Participant who is a Specified Employee, such payment shall commence on the date immediately following the six-month anniversary of the Separation from Service, or if earlier, on the date of the Participant's death.

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(d) Acceleration of Distributions . All or a portion of a Participant's Sub-Accounts may be distributed at an earlier time and in a different form than specified in this Article 4:

(ii) If the Participant has an unforeseeable emergency. For these purposes an "unforeseeable emergency" is a severe financial hardship of the Participant resulting from an illness or accident of the Participant or the Participant's spouse, Beneficiary or dependent (as defined in Section 152(a) of the Code, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant's primary residence may constitute an unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for funeral expenses of a spouse, Beneficiary or a dependent (as defined in Section 152(a) of the Code, without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)) may also constitute an unforeseeable emergency. Except as otherwise provided in this paragraph (c)(ii), the purchase of a home and the payment of college tuition are not unforeseeable emergencies. Whether a Participant is faced with an unforeseeable emergency permitting a distribution under this paragraph (c)(ii) is to be determined based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of an unforeseeable emergency may not be made to the extent such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Elective Deferrals.

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(iv) In the event of a Change in Control, in which case the Participant's Account shall be distributed to him or her in a single lump sum within 90 days after the date on which the Change in Control occurs.

4.6 Death Benefit . If a Participant dies with all or a portion of his or her Account unpaid, the Account shall be paid to his or her Beneficiary, as designated in accordance with Article 6, in the form (single lump sum or installments) elected by the Participant under Sections 4.2 and 4.4, subject to Section 4.5(b) and Article 7, with distribution commencing to the Beneficiary within 90 days following the date of the Participant's death. Notwithstanding the preceding sentence, for Elective Deferrals made for Plan Years beginning on or after January 1, 2010, if a Participant dies with all or a portion of his or her Account unpaid, the Account shall be paid to his or her Beneficiary, as designated in accordance with Article 6, in the form of a single lump sum, with distribution commencing to the Beneficiary within 90 days following the date of the Participant's death.

4.7 Funding . The Corporation's obligations under the Plan shall in every case be an unfunded and unsecured promise to pay. Each Participant's or Beneficiary's rights under the Plan shall be no greater than those of a general, unsecured creditor of the Corporation. The amount of each Participant's Account shall be reflected on the accounting records of the Corporation but shall not be construed to create, or require the creation of, a trust, custodial or escrow account. No Participant shall have any right, title or interest whatsoever in or to any investment reserves, accounts or funds the Corporation may purchase, establish or accumulate, and no Plan provision or action taken pursuant to the Plan shall create or be construed to create a trust or a fiduciary relationship of any kind between the Corporation and a Participant or any other person. All amounts paid under the Plan shall be paid in cash or Stock from the general assets of the Corporation, and the Corporation shall not be obligated under any circumstances to fund its financial obligations under the Plan. The Corporation may create a trust to hold funds or securities to be used in payment of its obligation under the Plan and may fund such trust; provided, however, any funds contained therein shall remain liable to the claims of the Corporation's general creditors.

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V . ADMINISTRATION

(a) to interpret the provisions of the Plan;

(b) to establish and revise the method of accounting for the Plan and to maintain the Accounts; and

5.2 Actions of the Committee . The Committee (including any person or entity to whom the Committee has delegated duties, responsibilities or authority, to the extent of such delegation) has total and complete discretionary authority to determine conclusively for all parties all questions arising in the administration of the Plan, to interpret and construe the terms of the Plan, and to determine all questions of eligibility and status of Participants and Beneficiaries under the Plan and their respective interests. Subject to the claims procedures of Article 9, all determinations, interpretations, rules and decisions of the Committee (including those made or established by any person or entity to whom the Committee has delegated duties, responsibilities or authority, if made or established pursuant to such delegation) are conclusive and binding upon all persons having or claiming to have any interest or right under the Plan.

5.3 Delegation . The Committee, or any officer or other employee of the Corporation designated by the Committee, shall have the power to delegate specific duties and responsibilities to officers or other employees of the Corporation or other individuals or entities. Any delegation may be rescinded by the Committee at any time. Each person or entity to whom a duty or responsibility has been delegated shall be responsible for the exercise of such duty or responsibility and shall not be responsible for any act or failure to act of any other person or entity.

5.4 Expenses . The expenses of administering the Plan shall be borne by the Corporation.

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5.7 Indemnification and Exculpation . The agents, officers, directors and employees of the Corporation and its Subsidiaries and the Committee shall be indemnified and held harmless by the Corporation against and from any and all loss, cost, liability or expense that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit or proceeding to which they may be a party or in which they may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by them in settlement (with the Corporation's written approval) or paid by them in satisfaction of a judgment in any such action, suit or proceeding. The foregoing provision shall not be applicable to any person if the loss, cost, liability or expense is due to such person's gross negligence or willful misconduct.

VI. BENEFICIARY DESIGNATION

VII. AMENDMENT AND TERMINATION

The Board of Directors or the Committee has the authority to amend, modify and/or terminate the Plan at any time. No amendment or termination of the Plan shall in any manner reduce the Account balance of any Participant without the consent of the Participant (or if the Participant has died, his or her Beneficiary). Without limiting the foregoing, the Board may, in its sole discretion: (a) freeze the Plan by precluding any further Elective Deferrals and/or other credits, but otherwise maintain the balance of the provisions of the Plan; or (b) terminate the Plan in its entirety and distribute the Participant's Accounts at an earlier date and in a different form than otherwise provided under the Plan, provided such termination and distribution comply with the requirements of Section 409A of the Code.

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VIII. CLAIMS PROCEDURE

The Committee shall notify a Participant in writing within 90 days of the Participant's written application for benefits of the Participant's eligibility or non-eligibility for benefits under the Plan; provided, however, benefit distribution shall not be contingent upon a Participant's application for benefits. If the Committee determines a Participant is not eligible for benefits or full benefits, the notice shall set forth: (a) the specific reasons for such denial; (b) a specific reference to the provision of the Plan on which the denial is based; (c) a description of any additional information or material necessary for the Participant to perfect the claim, and a description of why it is needed; and (d) an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Committee determines there are special circumstances requiring additional time to make a decision, the Committee shall notify the Participant of the special circumstances and the date by which a decision is expected to be made and may extend the time for up to an additional 90-day period. If a Participant is determined by the Committee to be not eligible for benefits, or if a Participant believes he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have the Participant's claim reviewed by the Committee by filing a petition for review with the Committee within 60 days after receipt by the Participant of the notice issued by the Committee. The petition shall state the specific reasons the Participant believes the Participant is entitled to benefits or greater or different benefits. Within 60 days after receipt by the Committee of the petition, the Committee shall afford the Participant (and the Participant's counsel, if any) an opportunity to present the Participant's position to the Committee orally or in writing, and the Participant (or counsel) shall have the right to review the pertinent documents, and the Committee shall notify the Participant of its decision in writing within the 60-day period, stating specifically the basis of the decision written in a manner calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Committee, but notice of this deferral shall be given to the Participant. If a Participant does not appeal on time, the Participant will have failed to exhaust the Plan's internal administrative appeal process, which is generally a prerequisite to bringing suit. In the event an appeal of a denial of a claim for benefits is denied, any lawsuit to challenge the denial of such claim must be brought within one year of the date the Committee has rendered a final decision on the appeal.

In the case of a Participant's death, the same procedures shall apply to the Beneficiary.

IX. MISCELLANEOUS

9.1 Rights as Stockholder . No person shall have any right as a stockholder of the Corporation with respect to any shares of Stock or other equity security of the Corporation payable under the Plan unless and until such person becomes a stockholder of record with respect to such shares or equity security.

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9.2 Governing Law . The Plan and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Iowa and construed in accordance therewith without giving effect to principles of conflicts of laws.

9.3 No Limit on Compensation Plans or Arrangements . Nothing contained in the Plan shall prevent the Corporation or a Subsidiary from adopting or continuing in effect other or additional compensation plans or arrangements.

9.4 No Right to Remain a Director . Neither the adoption and maintenance of the Plan nor the execution by the Corporation of a Deferral Election Agreement with any Participant be construed as giving a Participant the right to be retained as a Director of the Corporation, nor will it affect in any way the right of the Corporation to terminate a Participant's position as a Director, with or without cause. In addition, the Corporation may at any time remove or dismiss a Participant from his or her position as a Director free from any liability or any claim under the Plan.

9.5 Severability . If any provision of the Plan or any Deferral Election Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Deferral Election Agreement under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Board, materially altering the purpose or intent of the Plan or the Deferral Election Agreement, such provision shall be stricken as to such jurisdiction or Deferral Election Agreement, and the remainder of the Plan or any such Deferral Election Agreement shall remain in full force and effect.

9.6 Securities Matters . The Corporation shall not be required to deliver any share of Stock until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

9.7 No Fractional Shares . No fractional shares of Stock shall be issued or delivered pursuant to the Plan. Any fractional share otherwise payable under the Plan shall be settled in the form of cash.

9.8 Headings . Headings are given to the Articles, Sections and Subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

9.9 Nontransferability . No benefit payable at any time under the Plan will be subject in any manner to alienation, sale, transfer, assignment, pledge, levy, attachment or encumbrance of any kind.

9.10 Unfunded Plan . The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group of management or highly compensated employees" within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and therefore is further intended to be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA.

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9.11 No Other Agreements . The terms and conditions set forth herein constitute the entire understanding of the Corporation, the Subsidiaries and the Participants with respect to the matters addressed herein.

9.12 Incapacity . In the event any Participant is unable to care for his or her affairs because of illness or accident, any payment due may be paid to the Participant's spouse, parent, brother, sister, adult child or other person deemed by the Corporation to have incurred expenses for the care of the Participant, unless a duly qualified guardian or other legal representative has been appointed.

9.13 Release . Any payment of benefits to or for the benefit of a Participant made in good faith by the Corporation in accordance with the Corporation's interpretation of its obligations hereunder, shall be in full satisfaction of all claims against the Corporation and all Subsidiaries for benefits under the Plan to the extent of such payment.

9.14 Notices . Any notice permitted or required under the Plan shall be in writing and shall be hand-delivered or sent, postage prepaid, by first class mail, or by certified or registered mail with return receipt requested, to the Committee, if to the Corporation, or to the address last shown on the records of the Corporation, if to a Participant. Any such notice shall be effective as of the date of hand delivery or mailing.

9.15 Successors . All obligations of the Corporation under the Plan shall be binding upon and inure to the benefit of any successor to the Corporation, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business or assets of the Corporation.

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Exhibit 10.25

HNI CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

DEFERRAL ELECTION AGREEMENT

Applies Only to Compensation Earned in, or for Performance Periods Beginning in, _____

This Deferral Election Agreement (this "Agreement") is made by and between HNI Corporation (the "Corporation") and _____________________________ (print name) (the "Member") on the date below. The Corporation has established a nonqualified deferred compensation plan, the HNI Corporation Executive Deferred Compensation Plan (the "Plan"), for the benefit of certain members of the Corporation who are eligible to participate in the Plan according to the terms of the Plan document. The Plan permits an eligible member to defer a percentage of his/her Base Salary, as well as his/her compensation under the HNI Corporation Annual Incentive Plan ("AIP") and HNI Corporation Supplemental Income Plan ("SIP") (collectively, "Compensation"). The deferral for the Plan year commencing ______________ (the "Current Election Year") is made by entering into this Agreement with the Corporation. Capitalized terms used but not defined in this Agreement have the meaning given in the Plan.

The Corporation and the Member agree as follows:

1. Compensation Reduction Election. The Corporation will reduce the amount of the Member's Base Salary otherwise payable to the Member in the Current Election Year, and/or the amount payable to him/her under the AIP and SIP for services performed in the Current Election Year and will credit these amounts to the Member's Account under the Plan according to the Member's elections in Section 4 below.

2. Accounts. The Corporation will maintain two Accounts under the Plan, the Cash Account and the Stock Account. The Cash Account will be credited with interest at Prime Rate plus one percentage point. The Stock Account will be held in stock units. Each stock unit will be equal to a share of common stock of the Corporation ("Stock") and will be credited with reinvested dividends as if actually held in the form of Stock. The Member may elect to have any Compensation (permitted to be deferred under this Agreement) that otherwise (but for this Agreement) would have been paid to the Member in the form of cash, credited to the Stock Account and held in the form of stock units or credited to the Cash Account. Compensation deferred under this Agreement that would otherwise be paid to the Member in the form of Stock will automatically be credited to the Stock Account and held in stock units.

3. Manner of Distribution of Accounts. All distributions from the Cash Account will be made in cash. All distributions from the Stock Account will be made in Stock. The Member may elect when and how amounts credited under this Agreement will be distributed. Distributions may be made in a single lump sum or substantially equal annual installments over a period of years, as elected by the Member.

4. Member's Election for Current Election Year. Please fill in all applicable blanks (showing "0" if no amount will be deferred) and check all applicable boxes below to complete the election.

Amount Deferred

i. Base Salary

The Member elects to defer that portion of Base Salary otherwise payable to him/her in cash for services performed by the Member in the Current Election Year to be credited to the Member's Cash Account and/or Stock Account as follows:

Cash Account: _____% (Insert percent) of total Base Salary

Stock Account: _____% (Insert percent) of total Base Salary

(together, can be no more than 100%)

ii. AIP Compensation

1) Deferral from Cash Compensation. The Member elects to defer that portion of AIP Compensation otherwise payable to him/her in cash for services performed in the Current Election Year to be credited to the Member's Cash Account and/or Stock Account as follows:

Cash Account: _____% (Insert percent)

Stock Account: _____% (Insert percent)

(together, can be no more than 100%)

2) Deferral from Stock Compensation . The Member elects to defer that portion of AIP Compensation otherwise payable to him/her in Stock for services performed in the Current Election Year to be credited to the Member's Stock Account as follows:

Stock Account: _____% (Insert percent)

iii. SIP Compensation

1) Deferral from Cash Compensation. The Member elects to defer that portion of SIP Compensation otherwise payable to him/her in cash for services performed in the Current Election Year to be credited to the Member's Cash Account and/or Stock Account as follows:

Cash Account: _____% (Insert percent)

Stock Account: _____% (Insert percent)

(together, can be no more than 100%)

2) Deferral from Stock Compensation . The Member elects to defer that portion of SIP Compensation otherwise payable to him/her in Stock for services performed in the Current Election Year to be credited to the Member's Stock Account as follows:

Stock Account: _____% (Insert percent)

When/How Distributions Are Made

Distribution from the Cash Account will be made in the form of cash. Distributions from the Stock Account will be made in the form of Stock, which will be delivered to the Corporation's transfer agent and placed in a direct registration account in the Member's name unless the Member notifies the Corporation in sufficient time to coordinate a different share delivery method. All distributions from the Plan will be made on the 3 rd Monday of January. Distributions from both the Cash Account and the Stock Account will be made as follows:

i. Distribution Date : [Select one]

o Separation from Service

Commencement date: Distribution from the Cash Account and/or Stock Account will commence in _____. [Specify year in which distributions will begin, may be no earlier than _____.]

ii. Form of Distribution : [Select one]

o Lump sum

Substantially equal annual installments over ___ [Insert number, not to exceed 15] years

Note: You may change the time and form of distribution of an Account only under limited circumstances, generally requiring an additional 5-year deferral of your benefit commencement date.

5. The above deferral elections are based on the assumption the Corporation will continue its established practice of paying:

100% of the AIP award in cash; and

100% of the SIP award in Stock.

If any of the above Compensation items should be paid according to a different method (for example, 100% of the AIP award is actually paid in Stock), the Corporation will adjust the amount deferred in Stock or cash (as the case may be) under this Agreement so the dollar amount of the total deferral is the same as if the Corporation paid Compensation according to the established practice described above.

6. The Member understands this Agreement is subject to all of the terms and conditions of the Plan and acknowledges the Member has either read, or been given the opportunity to read, the Plan. In particular, the Member understands there are some exceptions to the payment terms described above. For example, if the Member Separates from Service for reasons other than Retirement, payment of the Member's Account will generally be made in a lump sum at Separation from Service, and a single lump-sum distribution will be made in the event of a Change in Control.

7. The Member understands if he or she is a "specified employee" within the meaning of Section 409A of the Internal Revenue Code, any distribution that is otherwise to begin on his or her Separation from Service will be delayed for six months to comply with applicable tax law.

8. The Member acknowledges that in making the decision to defer Compensation under the Plan, the Member has not relied upon any financial or tax advice provided by the Corporation, and the Member understands the Corporation has not received a ruling or determination from the Internal Revenue Service as to the effect of the deferral on the Member's income or employment tax liability.

9. Except as permitted by the Plan and applicable law or deemed advisable by the Corporation in order to preserve the intended tax consequences of the Plan, this Agreement, once made, may not be revoked. It is binding upon, and will inure to the benefit of, the Member, the Member's beneficiaries, heirs and personal representatives, the Corporation and its successors and assigns.

Dated this ___ day of _________________, _____.

	MEMBER:

Received and accepted by HNI Corporation this _______ day of_________________, _____.

	HNI Corporation


	By:
	Name:
	Title:

Exhibit 10.26

PARTICIPATION AGREEMENT

2007 Equity Plan for Non-Employee Directors of HNI Corporation

This Participation Agreement (this "Agreement") between _________________________ (print name) ("Director") and HNI Corporation (the "Corporation") is for the period commencing January 1, ____ and ending December 31, _____, and is subject to all of the terms and conditions of the 2007 Equity Plan for Non-Employee Directors of HNI Corporation (the "Plan") and any successor plan.

I elect to receive ________% of my Director cash compensation paid in the form of HNI common stock in accordance with the terms of the Plan.

Dated ________________________, _____.


	Director

Please complete this Agreement and return it to the Corporation's Vice President, Member & Community Relations, before January 1, _____ should you wish to participate.

Received and accepted by HNI Corporation this day of_____________, ______.

	HNI Corporation


	By:
	Name:
	Title:

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

Subsidiary	Country/State of Incorporation	Doing Business As

Allied Fireside, Inc.	Wisconsin	Inactive

Allsteel Inc.	Illinois	Allsteel Inc.

Maxon Furniture Inc.	Iowa	Maxon Furniture Inc.

The Gunlocke Company L.L.C.	Iowa	The Gunlocke Company L.L.C.

Hearth & Home Technologies Inc.	Iowa	Hearth & Home Technologies Inc.

HNI Asia L.L.C.	Iowa	HNI Asia L.L.C.

HFM Partners	Iowa	HFM Partners

HNI Services L.L.C.	Iowa	HNI Services L.L.C.

The HON Company	Iowa	The HON Company

HON INDUSTRIES (Canada) Inc.	Canada	HON INDUSTRIES (Canada) Inc.

HNI International Inc.	Iowa	HNI International Inc.

HNI International (Mexico) L.L.C.	Iowa	Inactive

HNI Technologies Inc.	Iowa	HNI Technologies Inc.

Pearl City Insurance Company	Vermont	Pearl City Insurance Company

River Bend Capital Corporation	Iowa	River Bend Capital Corporation

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.

Paoli Inc.	Iowa	Paoli Inc.

HHT L.L.C.	Washington	HHT L.L.C.

Omni Workspace Company	Minnesota	Omni Workspace Company

IntraSpec Solutions, LLC	Minnesota	Inactive

A&M Business Interior Services, LLC	Minnesota	A&M Business Interior Services, LLC

Corporate Installations Minneapolis LLC	Iowa	Corporate Installations Minneapolis LLC

HNI International (Puerto Rico) L.L.C.	Iowa	HNI International (Puerto Rico) L.L.C.

MacThrift Office Furniture LLC	Delaware	MacThrift Office Furniture LLC

Hickory Business Furniture, LLC	North Carolina	Hickory Business Furniture, LLC

Subsidiary	Country/State of Incorporation	Doing Business As

Commercial Office Interiors LLC	Delaware	Commercial Office Interiors LLC

Interior Construction Services LLC	Minnesota	Interior Construction Services LLC

Installation Technology LLC	Minnesota	Installation Technology LLC

Emerald City Moving & Storage LLC	Minnesota	Emerald City Moving & Storage LLC

Fullmer Contract, LLC	Delaware	Fullmer Contract, LLC

Contract Resource Group LLC	Delaware	Contract Resource Group LLC

Wilson Office Interiors LLC	Delaware	Wilson Office Interiors LLC

Compass Office Solutions LLC	Delaware	Compass Office Solutions LLC

Workspace Ohio LLC	Delaware	Dupler Office

Young Office Solutions LLC	Delaware	Young Office Solutions LLC

IAW LLC	Delaware	Ivan Allen Workspace

HNI Asia Technology Services (Shenzhen) Limited	PRC	HNI Asia Technology Services (Shenzhen) Limited

HNI Hong Kong Limited	Hong Kong	HNI Hong Kong Limited

Fullmer Installation Company	California	Fullmer Installation Company

Dongguan Lamex Furniture Co. Ltd.	PRC	Dongguan Lamex Furniture Co. Ltd.

Global Known Ltd.	Hong Kong	Inactive

Lamex Holdings Ltd.	Hong Kong	Lamex Holdings Ltd.

Lamex Trading Co. Ltd.	Hong Kong	Lamex Trading Co. Ltd.

Allsteel Asia Ltd.	Hong Kong	Allsteel Asia Ltd.

Polden Co. Ltd.	Hong Kong	Polden Co. Ltd.

Lamex China Investment Ltd.	Hong Kong	Lamex China Investment Ltd.

Lamex China Development Ltd.	Hong Kong	Lamex China Development Ltd.

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to incorporation by reference in the Registration Statements on Form S-8 (No. 033-54163, No.033-61305, No. 333-31366, No. 333-91682, No. 333-107690, No. 333-142717, No. 333-142742, and No. 333-159935) and on Form S-3 (No. 333-157578 and No. 333-159127) of HNI Corporation of our report dated February 26, 2010 relating to the financial statements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 10-K.

/s/PricewaterhouseCoopers LLP

Chicago, Illinois

February 26, 2010

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Sarbanes-Oxley Act Section 302

I, Stan A. Askren, certify that:

1. I have reviewed this Annual Report on Form 10-K of HNI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2010	/s/ Stan A. Askren
	Name:	Stan A. Askren
	Title:	Chairman, President and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Sarbanes-Oxley Act Section 302

I, Kurt A. Tjaden, certify that:

1. I have reviewed this Annual Report on Form 10-K of HNI Corporation;

and fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2010	/s/ Kurt A. Tjaden
	Name:	Kurt A. Tjaden
	Title:	Vice President and Chief Financial Officer

EXHIBIT 32.1

Certification of CEO and CFO Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of HNI Corporation (the "Corporation") for the period ended January 2, 2010, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Stan A. Askren, as Chairman, President and Chief Executive Officer of the Corporation, and Kurt A. Tjaden, as Vice President and Chief Financial Officer of the Corporation, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of the dates and for periods expressed in the Report.

	/s/ Stan A. Askren
	Name:	Stan A. Askren
	Title:	Chairman, President and Chief
		Executive Officer
	Date:	February 26, 2010


	/s/ Kurt A. Tjaden
	Name:	Kurt A. Tjaden
	Title:	Vice President and Chief Financial
		Officer
	Date:	February 26, 2010

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Corporation for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.