r10q32908.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
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FORM
10-Q
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(MARK
ONE)
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/
X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE
SECURITIES
EXCHANGE ACT OF 1934
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For
the quarterly period ended March 29, 2008
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OR
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/ / TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
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For
the transition period from ____________________ to
____________________
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Commission
File Number 1-14225
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HNI
Corporation
(Exact
name of Registrant as specified in its charter)
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Iowa
(State
or other jurisdiction of
incorporation
or organization)
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42-0617510
(I.R.S.
Employer
Identification
Number)
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P.
O. Box 1109, 408 East Second Street
Muscatine,
Iowa 52761-0071
(Address
of principal executive offices)
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52761-0071
(Zip
Code)
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Registrant's
telephone number, including area code: 563/272-7400
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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
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|
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Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition
of "accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer X Accelerated
filer
Non-accelerated
filer Smaller
reporting company
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|
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES
NO
X
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Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practical date.
|
Class
Common
Shares, $1 Par Value
|
Outstanding
at March 29, 2008
44,439,553
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HNI
Corporation and SUBSIDIARIES
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INDEX
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PART
I. FINANCIAL INFORMATION
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Page
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Item
1. Financial Statements (Unaudited)
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Condensed
Consolidated Balance Sheets March
29, 2008, and December 29, 2007
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3
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Condensed
Consolidated Statements of Income Three
Months Ended March 29, 2008, and March 31, 2007
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5
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|
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Condensed
Consolidated Statements of Cash Flows Three
Months Ended March 29, 2008, and March 31, 2007
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6
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Notes
to Condensed Consolidated Financial Statements
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7
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Item
2. Management’s Discussion and Analysis
of Financial
Condition and Results of Operations
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15
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Item
3. Quantitative and Qualitative Disclosure about
Market Risk
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20
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|
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Item
4. Controls and Procedures
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20
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PART
II. OTHER INFORMATION
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Item
1. Legal Proceedings
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21
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Item
1A. Risk Factors
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21
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Item
2. Unregistered Sales of Equity Securities and Use
of Proceeds
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21
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Item
3. Defaults Upon Senior Securities -
None
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-
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Item
4. Submission of Matters to a Vote of Security
Holders - None
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-
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Item
5. Other Information
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22
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Item
6. Exhibits
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22
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SIGNATURES
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23
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EXHIBIT
INDEX
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24
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PART
I. FINANCIAL INFORMATION
Item
1. Financial Statements
(Unaudited)
HNI
Corporation and SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
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|
|
|
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Mar.
29,
2008
(Unaudited)
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|
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Dec.
29,
2007
|
|
ASSETS
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
30,310 |
|
|
$ |
33,881 |
|
Short-term
investments
|
|
|
9,750 |
|
|
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9,900 |
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Receivables
|
|
|
251,902 |
|
|
|
288,777 |
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Inventories
(Note C)
|
|
|
111,239 |
|
|
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108,541 |
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Deferred
income taxes
|
|
|
18,817 |
|
|
|
17,828 |
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Prepaid
expenses and other current assets
|
|
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29,475 |
|
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30,145 |
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Total
Current Assets
|
|
|
451,493 |
|
|
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489,072 |
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|
|
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|
|
|
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PROPERTY,
PLANT, AND EQUIPMENT, at cost
|
|
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Land
and land improvements
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24,088 |
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23,805 |
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Buildings
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260,476 |
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268,650 |
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Machinery
and equipment
|
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510,330 |
|
|
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501,950 |
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Construction
in progress
|
|
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29,184 |
|
|
|
25,858 |
|
|
|
|
824,078 |
|
|
|
820,263 |
|
Less
accumulated depreciation
|
|
|
515,690 |
|
|
|
514,832 |
|
|
|
|
|
|
|
|
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Net
Property, Plant, and Equipment
|
|
|
308,388 |
|
|
|
305,431 |
|
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|
|
|
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GOODWILL
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|
|
316,700 |
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|
256,834 |
|
|
|
|
|
|
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OTHER
ASSETS
|
|
|
156,643 |
|
|
|
155,639 |
|
|
|
|
|
|
|
|
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Total
Assets
|
|
$ |
1,233,224 |
|
|
$ |
1,206,976 |
|
|
|
|
|
|
|
|
|
|
See
accompanying Notes to Condensed Consolidated Financial
Statements.
HNI
Corporation and SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
Mar.
29,
2008
(Unaudited)
|
|
|
Dec.
29,
2007
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
(In
thousands, except share and per share value data)
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$ |
295,238 |
|
|
$ |
367,320 |
|
Note
payable and current maturities of long-term debt
and capital lease obligations
|
|
|
50,660 |
|
|
|
14,715 |
|
Current
maturities of other long-term obligations
|
|
|
329 |
|
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2,426 |
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Total
Current Liabilities
|
|
|
346,227 |
|
|
|
384,461 |
|
|
|
|
|
|
|
|
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LONG-TERM
DEBT
|
|
|
286,300 |
|
|
|
280,315 |
|
|
|
|
|
|
|
|
|
|
CAPITAL
LEASE OBLIGATIONS
|
|
|
666 |
|
|
|
776 |
|
|
|
|
|
|
|
|
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|
OTHER
LONG-TERM LIABILITIES
|
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|
130,836 |
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|
|
55,843 |
|
|
|
|
|
|
|
|
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|
DEFERRED
INCOME TAXES
|
|
|
27,774 |
|
|
|
26,672 |
|
|
|
|
|
|
|
|
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|
MINORITY
INTEREST IN SUBSIDIARY
|
|
|
144 |
|
|
|
1 |
|
|
|
|
|
|
|
|
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SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
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|
Capital
Stock:
|
|
|
|
|
|
|
|
|
Preferred,
$1 par value, authorized 2,000,000 shares,
no shares outstanding
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
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|
Common,
$1 par value, authorized 200,000,000
shares, outstanding -
|
|
|
44,440 |
|
|
|
44,835 |
|
Mar.
29, 2008 – 44,439,553 shares;
|
|
|
|
|
|
|
|
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Dec.
29, 2007 – 44,834,519 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in capital
|
|
|
3,808 |
|
|
|
3,152 |
|
Retained
earnings
|
|
|
391,462 |
|
|
|
410,075 |
|
Accumulated
other comprehensive income
|
|
|
1,567 |
|
|
|
846 |
|
|
|
|
|
|
|
|
|
|
Total
Shareholders' Equity
|
|
|
441,277 |
|
|
|
458,908 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders' Equity
|
|
$ |
1,233,224 |
|
|
$ |
1,206,976 |
|
|
|
|
|
|
|
|
|
|
See
accompanying Notes to Condensed Consolidated Financial
Statements.
HNI
Corporation and SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
Three
Months Ended
|
|
Mar.
29,
2008
|
Mar.
31,
2007
|
|
(In
thousands, except share and per share data)
|
|
|
|
Net
sales
|
$563,383
|
$609,200
|
Cost
of sales
|
379,345
|
402,500
|
Gross
profit
|
184,038
|
206,700
|
Selling
and administrative expenses
|
172,555
|
170,814
|
Restructuring
and impairment
|
818
|
(136)
|
Operating
income
|
10,665
|
36,022
|
Interest
income
|
463
|
252
|
Interest
expense
|
3,877
|
4,288
|
Earnings
from continuing operations before income taxes and minority
interest
|
7,251
|
31,986
|
Income
taxes
|
3,180
|
11,363
|
Earnings
from continuing operations before minority interest
|
4,071
|
20,623
|
Minority
interest in earnings of subsidiary
|
94
|
(28)
|
Income
from continuing operations
|
3,977
|
20,651
|
Discontinued
operations, less applicable taxes
|
-
|
30
|
Net
income
|
$3,977
|
$
20,681
|
|
|
|
Net
income from continuing operations – basic
|
$0.09
|
$0.43
|
Net
income from discontinued operations - basic
|
-
|
$0.00
|
Net
income per common share – basic
|
$0.09
|
$0.43
|
Average
number of common shares outstanding – basic
|
44,537,399
|
47,995,728
|
Net
income from continuing operations – diluted
|
$0.09
|
$0.43
|
Net
income from discontinued operations – diluted
|
-
|
$0.00
|
Net
income per common share – diluted
|
$0.09
|
$0.43
|
Average
number of common shares outstanding – diluted
|
44,705,603
|
48,278,102
|
Cash
dividends per common share
|
$0.215
|
$0.195
|
See
accompanying Notes to Condensed Consolidated Financial
Statements.
|
HNI
Corporation and SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Three Months Ended
|
|
|
|
Mar.
29, 2008
|
|
|
Mar.
31, 2007
|
|
|
|
(In
thousands)
|
|
Net
Cash Flows From (To) Operating Activities:
|
|
|
|
|
|
|
Net
income
|
|
$ |
3,977 |
|
|
$ |
20,681 |
|
Noncash
items included in net income:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
17,021 |
|
|
|
17,182 |
|
Other
postretirement and post employment benefits
|
|
|
377 |
|
|
|
533 |
|
Stock-based
compensation
|
|
|
285 |
|
|
|
1,017 |
|
Excess
tax benefits from stock compensation
|
|
|
(11 |
) |
|
|
(602 |
) |
Deferred
income taxes
|
|
|
159 |
|
|
|
(7,532 |
) |
Loss
on sale, retirement and impairment of long-lived
assets and intangibles
|
|
|
619 |
|
|
|
918 |
|
Stock
issued to retirement plan
|
|
|
6,592 |
|
|
|
6,611 |
|
Other
– net
|
|
|
837 |
|
|
|
696 |
|
Net
increase (decrease) in non-cash operating assets
and liabilities
|
|
|
(25,484 |
) |
|
|
2,810 |
|
Increase
(decrease) in other liabilities
|
|
|
(2,398 |
) |
|
|
(1,469 |
) |
Net
cash flows from (to) operating activities
|
|
|
1,974 |
|
|
|
40,845 |
|
|
|
|
|
|
|
|
|
|
Net
Cash Flows From (To) Investing Activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(17,624 |
) |
|
|
(13,325 |
) |
Proceeds
from sale of property, plant and equipment
|
|
|
278 |
|
|
|
229 |
|
Acquisition
spending, net of cash acquired
|
|
|
- |
|
|
|
(782 |
) |
Short-term
investments – net
|
|
|
(250 |
) |
|
|
- |
|
Purchase
of long-term investments
|
|
|
(381 |
) |
|
|
(13,902 |
) |
Sales
or maturities of long-term investments
|
|
|
2,275 |
|
|
|
12,288 |
|
Other
– net
|
|
|
- |
|
|
|
100 |
|
Net
cash flows from (to) investing activities
|
|
|
(15,702 |
) |
|
|
(15,392 |
) |
|
|
|
|
|
|
|
|
|
Net
Cash Flows From (To) Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds
from sales of HNI Corporation common
stock
|
|
|
1,402 |
|
|
|
3,961 |
|
Purchase
of HNI Corporation common stock
|
|
|
(22,076 |
) |
|
|
(13,119 |
) |
Excess
tax benefits from stock compensation
|
|
|
11 |
|
|
|
602 |
|
Proceeds
from long-term debt
|
|
|
117,000 |
|
|
|
69,416 |
|
Payments
of note and long-term debt and other financing
|
|
|
(76,599 |
) |
|
|
(80,453 |
) |
Dividends
paid
|
|
|
(9,581 |
) |
|
|
(9,376 |
) |
Net
cash flows from (to) financing activities
|
|
|
10,157 |
|
|
|
(28,969 |
) |
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash
equivalents
|
|
|
(3,571 |
) |
|
|
(3,516 |
) |
Cash
and cash equivalents at beginning of period
|
|
|
33,881 |
|
|
|
28,077 |
|
Cash
and cash equivalents at end of period
|
|
$ |
30,310 |
|
|
$ |
24,561 |
|
|
|
See
accompanying Notes to Condensed Consolidated Financial
Statements.
|
|
HNI
Corporation and SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 29,
2008
Note
A. Basis of Presentation
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The December 29, 2007 consolidated
balance sheet included in this Form 10-Q was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
three-month period ended March 29, 2008 are not necessarily indicative of the
results that may be expected for the year ending January 3, 2009. For
further information, refer to the consolidated financial statements and
footnotes included in HNI Corporation's (the "Corporation") annual report on
Form 10-K for the year ended December 29, 2007.
Note B.
Stock-Based Compensation
Effective
January 1, 2006, the Corporation adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based
Payment." Accordingly, stock-based compensation expense is measured
at grant date, based on the fair value of the award and is recognized as expense
over the employee requisite service period. For the three months
ended March 29, 2008, and March 31, 2007, the Corporation recognized $0.3
million and $1.0 million, respectively, of stock-based compensation for the cost
of stock options and shares issued under the Corporation's Members' Stock
Purchase Plan.
At March
29, 2008, there was $5.3 million of unrecognized compensation cost related to
nonvested awards, which the Corporation expects to recognize over a
weighted-average period of 1.6 years.
Note
C. Inventories
The
Corporation values its inventory at the lower of cost or market with
approximately 81% valued by the last-in, first-out ("LIFO") method.
(In
thousands)
|
|
Mar.
29, 2008
(Unaudited)
|
|
|
Dec.
29, 2007
|
|
Finished
products
|
|
$ |
71,999 |
|
|
$ |
76,804 |
|
Materials
and work in process
|
|
|
60,149 |
|
|
|
52,641 |
|
LIFO
allowance
|
|
|
(20,909 |
) |
|
|
(20,904 |
) |
|
|
$ |
111,239 |
|
|
$ |
108,541 |
|
Note
D. Comprehensive Income and Shareholders' Equity
The
Corporation's comprehensive income for the first three months of 2008 consisted
of net income, adjustments to net periodic benefit costs of $0.1 million,
unrealized holding gains or losses on marketable securities of ($0.2) million,
and foreign currency adjustments of $0.8 million.
For the
three months ended March 29, 2008, the Corporation repurchased 704,700 shares of
its common stock at a cost of approximately $22.1 million. As of
March 29, 2008, $170.1 million of the Corporation's Board of Directors' current
repurchase authorization remained unspent.
Note
E. Earnings Per Share
The
following table reconciles the numerators and denominators used in the
calculation of basic and diluted earnings per share ("EPS"):
|
|
Three Months Ended
|
|
(In
thousands, except per share data)
|
|
Mar.
29,
2008
|
|
|
Mar.
31, 2007
|
|
Numerators:
|
|
|
|
|
|
|
Numerator
for both basic
and diluted EPS net
income
|
|
$ |
3,977 |
|
|
$ |
20,681 |
|
Denominators:
|
|
|
|
|
|
|
|
|
Denominator
for basic EPS weighted-average
common shares
outstanding
|
|
|
44,537 |
|
|
|
47,996 |
|
Potentially
dilutive shares from
stock option plans
|
|
|
169 |
|
|
|
282 |
|
Denominator
for diluted EPS
|
|
|
44,706 |
|
|
|
48,278 |
|
Earnings
per share – basic
|
|
$ |
0.09 |
|
|
$ |
0.43 |
|
Earnings
per share – diluted
|
|
$ |
0.09 |
|
|
$ |
0.43 |
|
Certain
exercisable and non-exercisable stock options were not included in the
computation of diluted EPS at March 29, 2008, and March 31, 2007, because their
inclusion would have been anti-dilutive. The number of stock options
outstanding, which met this anti-dilutive criterion for the three months ended
March 29, 2008, and March 31, 2007, was 774,983 and 320,509,
respectively.
Note
F. Restructuring Reserve and Plant Shutdowns
As a
result of the Corporation's ongoing business simplification and cost reduction
strategies, management made the decision in the third quarter 2007 to close an
office furniture facility, consolidate production into other manufacturing
locations, close two distribution centers and start up a new distribution
center. The Corporation expects that the closures and consolidations
will be completed early in the third quarter of 2008. The Corporation
anticipates additional restructuring charges and transition costs of
approximately $4 to $6 million.
(In
thousands)
|
|
Severance
|
|
|
Facility
Exit Costs & Other
|
|
|
Total
|
|
Balance
as of December 29, 2007
|
|
$ |
3,858 |
|
|
$ |
990 |
|
|
$ |
4,848 |
|
Restructuring
charges
|
|
|
67 |
|
|
|
751 |
|
|
|
818 |
|
Cash
payments
|
|
|
(2,874 |
) |
|
|
(1,329 |
) |
|
|
(4,203 |
) |
Balance
as of March 29, 2008
|
|
$ |
1,051 |
|
|
$ |
412 |
|
|
$ |
1,463 |
|
Note
G. Business Combinations
The
Corporation completed the acquisition of Hickory Business Furniture ("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 funding of the transaction did not
occur until March 31, 2008. The Corporation did fund the
acquisition with its revolving credit facility and therefore the purchase price
liability is recorded as long-term and included in other long-term liabilities
as of March 29, 2008. The Corporation is in the process of finalizing
the allocation of the purchase price, with valuations and determination of
working capital adjustments to be completed. There are approximately
$64 million of intangibles associated with this acquisition, which have all been
currently classified as goodwill and will be reclassified based on final
valuations.
Note
H. Discontinued Operations
The
Corporation completed the sale of a small non-core component of its office
furniture segment during the second quarter of 2007. Revenues and
expenses associated with this component are presented as discontinued operations
for the periods presented.
Summarized
financial information for discontinued operations is as follows:
|
|
Three Months Ended
|
|
(In
thousands)
|
|
Mar.
29, 2008
|
|
|
Mar.
31, 2007
|
|
Discontinued
operations:
|
|
|
|
|
|
|
Operating
income/(loss) before tax
|
|
$ |
- |
|
|
$ |
47 |
|
Tax
impact
|
|
|
- |
|
|
|
17 |
|
Income/(loss)
from discontinued operations,
net of income tax
|
|
$ |
- |
|
|
$ |
30 |
|
Note I.
Goodwill and Other Intangible Assets
The table
below summarizes amortizable definite-lived intangible assets as of March 29,
2008 and December 29, 2007, which are reflected in the "Other Assets" line item
in the Corporation's condensed consolidated balance sheets:
(In
thousands)
|
|
Mar.
29, 2008
|
|
|
Dec.
29, 2007
|
|
Patents
|
|
$ |
19,325 |
|
|
$ |
18,780 |
|
Customer
relationships and other
|
|
|
103,489 |
|
|
|
101,320 |
|
Less: accumulated
amortization
|
|
|
47,993 |
|
|
|
45,833 |
|
|
|
$ |
74,821 |
|
|
$ |
74,267 |
|
Aggregate
amortization expense for the three months ended March 29, 2008 and March 31,
2007 was $2.2 million and $2.4 million, respectively. 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)
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
Amortization
Expense
|
|
$ |
8.5 |
|
|
$ |
7.2 |
|
|
$ |
6.9 |
|
|
$ |
5.9 |
|
|
$ |
5.1 |
|
As events
such as potential acquisitions, dispositions or impairments occur in the future,
these amounts may change.
The
Corporation also owns trademarks and trade names with a net carrying amount of
$45.7 million. The trademarks are deemed to have indefinite useful
lives because they are expected to generate cash flows
indefinitely.
The
changes in the carrying amount of goodwill since December 29, 2007, are as
follows by reporting segment:
(In
thousands)
|
|
Office
Furniture
|
|
|
Hearth
Products
|
|
|
Total
|
|
Balance
as of December 29, 2007
|
|
$ |
85,274 |
|
|
$ |
171,560 |
|
|
$ |
256,834 |
|
Goodwill
increase during period
|
|
|
64,374 |
|
|
|
(4,508 |
) |
|
|
59,866 |
|
Balance
as of March 29, 2008
|
|
$ |
149,648 |
|
|
$ |
167,052 |
|
|
$ |
316,700 |
|
In
accordance with SFAS No. 142 "Goodwill and Other Intangible Assets," the
Corporation evaluates its goodwill for impairment on an annual basis based on
values at the end of the third quarter, or whenever indicators of impairment
exist. The Corporation has previously evaluated its goodwill for
impairment and has determined that the fair value of the reporting units exceeds
their carrying value so no impairment of goodwill was recognized in the
quarter. The increase in the office furniture segment goodwill
relates to the HBF acquisition completed during the first
quarter. The decrease in the hearth products segment relates to final
purchase price allocations for a previous acquisition and the sale of a few
small distribution and service locations.
Note J. Product Warranties
The
Corporation issues certain warranty policies on its office furniture and hearth
products that provide for repair or replacement of any covered product or
component that fails during normal use because of a defect in design 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
during the period:
|
|
Three Months Ended
|
|
(In
thousands)
|
|
Mar.
29, 2008
|
|
|
Mar.
31, 2007
|
|
Balance
at beginning of period
|
|
$ |
12,123 |
|
|
$ |
10,624 |
|
Accruals
for warranties issued during period
|
|
|
4,442 |
|
|
|
3,797 |
|
Adjustments
related to pre-existing warranties
|
|
|
526 |
|
|
|
(127 |
) |
Settlements
made during the period
|
|
|
(4,612 |
) |
|
|
(3,832 |
) |
Balance
at end of period
|
|
$ |
12,479 |
|
|
$ |
10,462 |
|
Note
K. Postretirement Health Care
In
accordance with the interim disclosure requirements of revised SFAS No. 132,
"Employers’ Disclosures about Pensions and other Postretirement Benefits," the
following table sets forth the components of net periodic benefit cost included
in the Corporation's income statement for:
|
|
Three
Months Ended
|
|
(In
thousands)
|
|
Mar.
29, 2008
|
|
|
Mar.
31, 2007
|
|
Service
cost
|
|
$ |
99 |
|
|
$ |
120 |
|
Interest
cost
|
|
|
241 |
|
|
|
267 |
|
Expected
return on plan assets
|
|
|
(90 |
) |
|
|
(60 |
) |
Amortization
of transition obligation
|
|
|
127 |
|
|
|
145 |
|
Amortization
of prior service cost
|
|
|
- |
|
|
|
58 |
|
Amortization
of (gain)/loss
|
|
|
- |
|
|
|
3 |
|
Net
periodic benefit cost
|
|
$ |
377 |
|
|
$ |
533 |
|
Note
L. Income Taxes
In the
first quarter of 2008, the Corporation completed a detailed analysis and
reconciliation of a fixed asset system conversion and determined that net
deferred income tax liabilities were understated by $0.6
million. This understatement primarily related to a deferred tax
liability associated with computer software. To correct this
difference, the Corporation increased income tax expense in the first quarter of
2008 by $0.6 million. The effect of this adjustment is to increase
the effective income tax rate related to continuing operations by 0.6 percentage
points for the full year and decrease earnings per share from continuing
operations by $0.01.
Note
M. Commitments and Contingencies
The
Corporation utilizes letters of credit in the amount of $25.2 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 competitively determined
fees.
The
Corporation has contingent liabilities, which have arisen in the course of its
business, including pending litigation, preferential payment claims in customer
bankruptcies, 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 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.
Note N. New Accounting Standards
The
Corporation partially adopted SFAS No. 157 "Fair Value Measurements" ("SFAS No.
157"), which provides enhanced guidance for using fair value to measure assets
and liabilities on December 30, 2007, the beginning of its 2008 fiscal
year. The standard also expands 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 standard applies whenever other
standards require (or permit) assets or liabilities to be measured at fair value
but does not expand the use of fair value in any new
circumstances. The Corporation has not applied the provisions of SFAS
No. 157 to goodwill and intangibles in accordance with Financial Accounting
Standards Board Staff Position 157-2.
For
recognition purposes, on a recurring basis the Corporation is required to
measure at fair value its marketable securities, which are classified as
available-for-sale, and its investment in target funds. The
marketable securities were comprised of investments in money market
funds. They are reported as noncurrent assets as they are not
anticipated to be used for current operations. The target funds are
reported as both current and noncurrent assets based on the portion that is
anticipated to be used for current operations.
Assets
measured at fair value during the three months ended March 29, 2008 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
|
|
$ |
4,791 |
|
|
$ |
4,791 |
|
|
$ |
- |
|
|
$ |
- |
|
Investment
in target funds
|
|
|
33,938 |
|
|
|
- |
|
|
|
33,938 |
|
|
|
- |
|
The
Corporation adopted SFAS No. 159, "The Fair Value Option for Financial Assets
and Financial Liabilities" ("SFAS 159"), 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 on December 30, 2007,
the beginning of its 2008 fiscal year. The objective of SFAS 159 is
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 adoption of this Statement did not have a material
impact on its financial statements.
In
December 2007, the FASB issued SFAS No. 141(Revised), "Business Combinations"
("SFAS No. 141(R)"), replacing SFAS No. 141, "Business Combinations" and SFAS
No. 160, "Noncontrolling Interests in Consolidation Financial Statements – An
Amendment of ARB No. 51" ("SFAS No. 160"). SFAS No. 141(R) retains
the fundamental requirements of SFAS No. 141, broadens its scope by applying the
acquisition method to all transactions and other events in which one entity
obtains control over one or more other businesses, and requires, among other
things, that assets acquired and liabilities assumed be measured at fair value
as of the acquisition date, that liabilities related to contingent
considerations be recognized at the acquisition date and remeasured at fair
value in each subsequent reporting period, that acquisition-related costs be
expensed as incurred, and that income be recognized if the fair value of the net
assets acquired exceeds the fair value of the consideration
transferred. SFAS No. 160 establishes accounting and reporting
standards for noncontrolling interests (i.e., minority interests) in a
subsidiary, including changes in a parent’s ownership interest in a subsidiary
and requires among other things, that noncontrolling interests in subsidiaries
be classified as a separate component of equity. Except for the
presentation and disclosure requirements of SFAS No. 160, which are to be
applied retrospectively for all periods presented, SFAS No. 141(R) and SFAS No.
160 are to be applied prospectively in financial statements issued for fiscal
years beginning after December 15, 2008. The Corporation does not
anticipate any material impact to its financial statements from the adoption of
SFAS No. 160.
Note
O. Business Segment Information
Management
views the Corporation as operating in two business segments: office furniture
and hearth products with the former being the principal business
segment.
The
office furniture segment manufactures and markets a broad line of metal and wood
commercial and home office furniture which includes file cabinets, desks,
credenzas, chairs, storage cabinets, tables, bookcases, freestanding office
partitions and panel systems, and other related products. The hearth
products segment manufactures and markets a broad line of manufactured gas-,
pellet- and wood-burning fireplaces and stoves, fireplace inserts, and chimney
systems 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 cost of the Corporation's corporate operations,
interest income, and interest expense. The decrease in unallocated
corporate expenses compared to prior year is due to decreased interest expense
and group medical and incentive compensation costs. Management views
interest income and expense as corporate financing costs rather than a business
segment cost. In addition, management applies one effective tax rate
to its consolidated income before income taxes so income taxes are not reported
or viewed internally on a segment basis.
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 three
month periods ended March 29, 2008, and March 31, 2007, is as
follows:
|
|
Three Months Ended
|
|
(In
thousands)
|
|
Mar.
29, 2008
|
|
|
Mar.
31, 2007
|
|
Net
Sales:
|
|
|
|
|
|
|
Office
Furniture
|
|
$ |
466,025 |
|
|
$ |
497,851 |
|
Hearth
Products
|
|
|
97,358 |
|
|
|
111,349 |
|
|
|
$ |
563,383 |
|
|
$ |
609,200 |
|
|
|
|
|
|
|
|
|
|
Operating
Profit:
|
|
|
|
|
|
|
|
|
Office
furniture (1)
|
|
|
|
|
|
|
|
|
Operations
before restructuring charges
|
|
$ |
19,550 |
|
|
$ |
38,926 |
|
Restructuring
and impairment charges
|
|
|
(799 |
) |
|
|
136 |
|
Office
furniture – net
|
|
|
18,751 |
|
|
|
39,062 |
|
Hearth
products
|
|
|
|
|
|
|
|
|
Operations
before restructuring charges
|
|
|
(2,847 |
) |
|
|
7,721 |
|
Restructuring
and impairment charges
|
|
|
(19 |
) |
|
|
- |
|
Hearth
products – net
|
|
|
(2,866 |
) |
|
|
7,721 |
|
Total
operating profit
|
|
|
15,885 |
|
|
|
46,783 |
|
Unallocated
corporate expense
|
|
|
(8,778 |
) |
|
|
(14,753 |
) |
Income
before income taxes
|
|
$ |
7,107 |
|
|
$ |
32,030 |
|
|
|
|
|
|
|
|
|
|
Depreciation
& Amortization Expense:
|
|
|
|
|
|
|
|
|
Office
furniture
|
|
$ |
12,076 |
|
|
$ |
12,354 |
|
Hearth
products
|
|
|
3,846 |
|
|
|
3,688 |
|
General
corporate
|
|
|
1,099 |
|
|
|
1,140 |
|
|
|
$ |
17,021 |
|
|
$ |
17,182 |
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures:
|
|
|
|
|
|
|
|
|
Office
furniture
|
|
$ |
13,912 |
|
|
$ |
10,825 |
|
Hearth
products
|
|
|
2,844 |
|
|
|
2,207 |
|
General
corporate
|
|
|
868 |
|
|
|
293 |
|
|
|
$ |
17,624 |
|
|
$ |
13,325 |
|
|
|
|
|
|
|
|
|
|
|
|
As
of
Mar.
29, 2008
|
|
|
As
of
Mar.
31, 2007
|
|
Identifiable
Assets:
|
|
|
|
|
|
|
|
|
Office
furniture
|
|
$ |
776,650 |
|
|
$ |
706,275 |
|
Hearth
products
|
|
|
339,552 |
|
|
|
356,638 |
|
General
corporate
|
|
|
117,022 |
|
|
|
110,297 |
|
|
|
$ |
1,233,224 |
|
|
$ |
1,173,210 |
|
(1) Includes
minority interest.
Item
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The
Corporation has two reportable core operating 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 its various brands and selling models. The
Corporation is focused on growing its existing businesses while seeking out and
developing new opportunities for growth.
Net sales
for the first quarter of 2008 decreased 7.5 percent to $563.4
million. The decrease was driven by a decline in the new construction
channel of the hearth business and substantial weakness in the supplies driven
channel of the office furniture business. Gross margins for the
quarter decreased from prior year levels due primarily to decreased volume and
accelerated depreciation and transition costs related to consolidation of office
furniture facilities. Selling and administrative expenses increased
due to higher non-volume related freight costs, increased restructuring costs
and transitional costs associated with the plant consolidation and costs
associated with new acquisitions.
The
Corporation completed the purchased of HBF, a leading provider of premium
upholstered seating, textiles, wood tables, and wood case goods for the office
furniture environment on March 29, 2008.
Critical Accounting
Policies
The
preparation of the financial statements requires the Corporation to make
estimates and judgments that affect the reported amount of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. The Corporation continually evaluates its accounting
policies and estimates. The Corporation bases its estimates on
historical experience and on a variety of other assumptions believed to be
reasonable in order to make judgments about the carrying value of assets and
liabilities. Actual results may differ from these estimates under
different assumptions or conditions. A summary of the more
significant accounting policies that require the use of estimates and judgments
in preparing the financial statements is provided in the Corporation's Annual
Report on Form 10-K for the year ended December 29, 2007. During the
first three months of 2008, there were no material changes in the accounting
policies and assumptions previously disclosed, except for the Corporation's
adoption of SFAS No. 157.
Recent Accounting
Pronouncements
The
Corporation partially adopted SFAS No. 157 "Fair Value Measurements," which
provides enhanced guidance for using fair value to measure assets and
liabilities on December 30, 2007, the beginning of its 2008 fiscal
year. The standard also expands the amount of 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 standard applies whenever other
standards require (or permit) assets or liabilities to be measured at fair value
but does not expand the use of fair value in any new
circumstances. The Corporation has not applied the provisions of SFAS
No. 157 to goodwill and intangibles in accordance with FASB Staff Position
157-2.
Results of
Operations
The
following table presents certain key highlights from the results of operations
for the periods indicated:
|
|
Three
Months Ended
|
|
(In
thousands)
|
|
Mar.
29, 2008
|
|
|
Mar.
31, 2007
|
|
|
Percent
Change
|
|
Net
sales
|
|
$ |
563,383 |
|
|
$ |
609,200 |
|
|
|
-7.5 |
% |
Cost
of sales
|
|
|
379,345 |
|
|
|
402,500 |
|
|
|
-5.8 |
|
Gross
profit
|
|
|
184,038 |
|
|
|
206,700 |
|
|
|
-11.0 |
|
Selling
& administrative expenses
|
|
|
172,555 |
|
|
|
170,814 |
|
|
|
1.0 |
|
Restructuring
& impairment charges
|
|
|
818 |
|
|
|
(136 |
) |
|
|
-701.5 |
|
Operating
income
|
|
|
10,665 |
|
|
|
36,022 |
|
|
|
-70.4 |
|
Interest
expense, net
|
|
|
3,414 |
|
|
|
4,036 |
|
|
|
-15.4 |
|
Earnings
from continuing operations before income taxes
and minority interest
|
|
|
7,251 |
|
|
|
31,986 |
|
|
|
-77.3 |
|
Income
taxes
|
|
|
3,180 |
|
|
|
11,363 |
|
|
|
-72.0 |
|
Minority
interest in earnings of a subsidiary
|
|
|
94 |
|
|
|
(28 |
) |
|
|
-435.7 |
|
Income
from continuing operations
|
|
$ |
3,977 |
|
|
$ |
20,651 |
|
|
|
-80.7 |
|
Consolidated
net sales for the first quarter decreased 7.5 percent or $45.8 million compared
to the same quarter last year. Acquisitions contributed $20.2 million
or 3.3 percentage points of sales. Organic sales growth was down due
primarily to the decline in the new construction channel of the hearth business
and substantial weakness in the supplies driven channel of the office furniture
business.
Gross
margins for the first quarter decreased to 32.7 percent compared to 33.9 percent
for the same quarter last year. The reduction in gross margin was due
to decreased volume as well as accelerated depreciation and transition costs
related to the consolidation of office furniture facilities.
Total
selling and administrative expenses, including restructuring charges, as a
percent of sales increased to 30.8 percent compared to 28.0 percent in the prior
year quarter. The increase was driven by higher freight costs,
increased investment in product development and selling initiatives, increased
restructuring costs and transitional costs associated with plant consolidation
and costs associated with new acquisitions.
The
Corporation continued its plan of a facility shutdown, a facility ramp-up,
closure of two distribution centers and consolidation and start-up of a new
distribution center that was announced in 2007. First quarter 2008
included $8.5 million of restructuring charges and transition costs in
connection with this project. These included $0.4 million of
accelerated depreciation and $3.9 million of other transition costs recorded in
cost of sales, $0.8 million of costs recorded as restructuring costs, and $3.4
million of other transition costs recorded in selling and administrative
expenses.
Income
from continuing operations decreased 80.7 percent and income from continuing
operations per diluted share decreased 79.1 percent compared to the same quarter
in 2007.
Interest
expense decreased $0.4 million during the quarter due to lower average interest
rates partially offset by increased borrowings. Income from
continuing operations per share was positively impacted $0.01 per share as a
result of the Corporation's share repurchase program.
The
effective tax rate for first quarter 2008 was 43.9 percent compared to 35.5
percent in first quarter 2007 due to a deferred tax adjustment. In the
first quarter of 2008, the Corporation completed a detailed analysis and
reconciliation of a fixed asset system conversion and determined that net
deferred income tax liabilities were understated by $0.6
million. This understatement primarily related to a deferred tax
liability associated with computer software. To correct this
difference, the Corporation increased income tax expense in the first quarter of
2008 by $0.6 million. The effect of this adjustment is to increase
the effective income tax rate related to continuing operations by 0.6 percentage
points for the full year and decrease earnings per share from continuing
operations by $0.01. The Corporation anticipates the annualized tax
rate for 2008 to be approximately 35.6 percent including the
adjustment.
The
Corporation completed the purchase of HBF, a leading provider of premium
upholstered seating, textiles, wood tables, and wood case goods for the office
furniture environment on March 29, 2008. The funding of the
transaction did not occur until March 31, 2008.
Office
Furniture
First
quarter sales for the office furniture segment decreased 6.4 percent or $31.8
million to $466.0 million from $497.9 million for the same quarter last year due
to lower sales from the supplies-driven channel driven by low consumer and small
business confidence. Acquisitions contributed $6.9 million or 1.4
percentage points of sales. Operating profit prior to unallocated
corporate expenses decreased $20.3 million to $18.8 million as a result of lower
volume, increased non-volume related freight, restructuring and transition costs
related to a plant shutdown, a facility ramp-up, closure of two distribution
centers and start-up of a new distribution center, and increased investments in
growth initiatives and selling capabilities.
Hearth
Products
First
quarter net sales for the hearth products segment decreased 12.6 percent or
$14.0 million to $97.4 million from $111.3 million for the same quarter last
year. The Corporation's acquisitions completed during 2007
contributed $13.3 million or 11.9 percentage points. Excluding
acquisitions, sales declined 24.5 percent driven by a 34 percent decrease in new
construction channel revenue. The Corporation continued to be
negatively impacted by housing market conditions. Operating profit
prior to unallocated corporate expenses decreased $10.6 million to a $2.9
million loss due to lower volume and a larger mix of lower margin
remodel/retrofit business.
Liquidity and Capital
Resources
As of
March 29, 2008, cash and short-term investments were $40.1 million compared to
$43.8 million at year-end 2007. Cash flow from operations for the
first three months of fiscal 2008 was $2.0 million compared to $40.8 million in
2007 due to lower net income and the timing of working capital requirements in
the current year. Cash flow and working capital management continue
to be a major focus of management to ensure the Corporation is poised for
growth. The Corporation has sufficient liquidity to manage its
operations and as of March 29, 2008 maintained additional borrowing capacity of
$105 million, net of amounts designated for letters of credit, through a $300
million revolving bank credit agreement.
Capital
expenditures for the first three months of fiscal 2008 were $17.6 million
compared to $13.3 million in 2007 and were primarily for tooling and equipment
for new products and the plant consolidation. For the full year 2008,
capital expenditures are expected to be $65 to $70 million due to new product
development and related tooling and other infrastructure
efficiencies.
The
Corporation completed the acquisition of HBF during the first quarter ended
March 29, 2008 for a purchase price of approximately $75 million, however, the
funding of the transaction did not occur until March 31, 2008. During
the first three months of 2008, net borrowings under the Corporation’s revolving
credit facility increased $42 million to fund capital expenditures and share
repurchase. As of March 29, 2008, $170 million of the revolving
credit facility was outstanding with $36 million classified as short-term as the
Corporation expects to repay that portion of the borrowings within the next
twelve months. The Corporation did fund the HBF acquisition with its
revolving credit facility and therefore the purchase price liability is recorded
as long-term and included in other long-term liabilities as of March 29,
2008.
On
February 13, 2008, the Corporation's Board of Directors (the "Board") approved a
10.3 percent increase in the common stock quarterly cash dividend from $0.195
per share to $0.215 per share. The dividend was paid on February 29,
2008, to shareholders of record on February 22, 2008. This was the
212th
consecutive quarterly dividend paid by the Corporation.
For the
three months ended March 29, 2008, the Corporation repurchased 704,700 shares of
its common stock at a cost of approximately $22.1 million, or an average price
of $31.33 per share. As of March 29, 2008, approximately $170.1
million of the Board’s current repurchase authorization remained
unspent.
Off-Balance Sheet
Arrangements
The
Corporation does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future material effect on financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.
Contractual
Obligations
Contractual
obligations associated with ongoing business and financing activities will
result in cash payments in future periods. A table summarizing the
amounts and estimated timing of these future cash payments was provided in the
Corporation's Annual Report on Form 10-K for the year ended December 29,
2007. During the first three months of fiscal 2008 there were no
material changes outside the ordinary course of business in the Corporation's
contractual obligations or the estimated timing of the future cash
payments.
Commitments and
Contingencies
The
Corporation is involved in various kinds of disputes and legal proceedings that
have arisen in the course of its business, including pending litigation,
preferential payment claims in customer bankruptcies, 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 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.
Looking
Ahead
Management
expects the economy to continue to be difficult. Weakness in the
supplies-driven channel of the office furniture business is expected to
continue. Management also anticipates that the project business will
soften some with the economy as organizations reduce or defer
capital
spending. The Corporation expects to continue its investment in
growth opportunities and position for the market recovery by enhancing its
selling capabilities and launching a significant number of new
products. The Corporation will work to offset the market softness and
rising fuel and material costs by eliminating waste, attacking structural cost
and streamlining its businesses.
The
hearth business continues to be negatively impacted by housing market
conditions. The timing of any housing market recovery remains
uncertain. Sales and profitability will be challenged through
2008. The Corporation will continue to tightly manage its costs and
improve its competitive position with an eye on a mid-term housing market
recovery.
The
Corporation continues to focus on creating long-term shareholder value by
growing its businesses through investment in building brands, product solutions,
and selling models, enhancing its strong member-owner culture and remaining
focused on its long-standing continuous improvement programs to build best total
cost and a lean enterprise.
Forward-Looking
Statements
Statements
in this report that are not strictly historical, 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
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," and variations of such words, and similar
expressions identify forward-looking statements. Forward-looking
statements involve known and unknown risks, which may cause the Corporation's
actual results in the future to differ materially from expected
results. These risks include, without
limitation: the Corporation's ability to realize financial benefits
from its (a) price increases, (b) cost containment and business simplification
initiatives for the entire Corporation, (c) investments in strategic
acquisitions, new products and brand building, (d) investments in distribution
and rapid continuous improvement, (e) repurchases of common stock, (f) ability
to maintain its effective tax rate, and (g) consolidation and logistical
realignment initiatives; uncertainty related to the availability of cash to fund
future growth; lower than expected demand for the Corporation's products due to
uncertain political and economic conditions, including, with respect to the
Corporation's hearth products, the protracted decline in the housing market;
lower industry growth than expected; major disruptions at our key facilities or
in the supply of any key raw materials, components or finished goods;
uncertainty related to disruptions of business by terrorism, military action,
acts of God or other Force Majeure events; competitive pricing pressure from
foreign and domestic competitors; higher than expected costs and lower than
expected supplies of materials (including steel and petroleum based materials);
higher than expected costs for energy and fuel; changes in the mix of products
sold and of customers purchasing; restrictions imposed by the terms of the
Corporation’s revolving credit facility and note purchase agreement; currency
fluctuations and other factors described in the Corporation's annual and
quarterly reports filed with the Securities and Exchange Commission on Forms
10-K and 10-Q. The Corporation undertakes 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.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
As of
March 29, 2008, there were no material changes to the financial market risks
that affect the quantitative and qualitative disclosures presented in Item 7A of
the Corporation's Annual Report on Form 10-K for the year ended December 29,
2007.
Item 4. 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, is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission'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 acting chief financial
officer, as appropriate, to allow timely decisions regarding required
disclosure.
Under the
supervision and with the participation of management, the chief executive
officer and acting chief financial officer of the Corporation has evaluated the
effectiveness of the design and operation of the Corporation's disclosure
controls and procedures as of March 29, 2008, and, based on his evaluation, the
chief executive officer and acting chief financial officer has concluded that
these controls and procedures are effective.
Furthermore,
there have been no changes in the Corporation's internal control over financial
reporting during the fiscal quarter covered by this Form 10-Q that have
materially affected, or are reasonably likely to materially affect, its internal
control over financial reporting.
PART
II. OTHER INFORMATION
Item 1. Legal
Proceedings
There are
no new legal proceedings or material developments to report.
Item 1A. Risk
Factors
There
have been no material changes from the risk factors disclosed in the "Risk
Factors" section of the Corporation's Annual Report on Form 10-K for the year
ended December 29, 2007.
Item
2. Unregistered Sales of Equity Securities
and Use of Proceeds
Issuer
Purchases of Equity Securities
The
following is a summary of share repurchase activity during the first quarter
ended March 29, 2008.
Period
|
|
(a) Total
Number of Shares (or Units) Purchased (1)
|
|
|
(b)
Average Price Paid per Share or Unit
|
|
|
(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced
Plans or Programs
|
|
|
(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May
Yet Be Purchased Under the Plans or Programs
|
|
12/30/07
– 1/26/08
|
|
|
282,600 |
|
|
$ |
31.50 |
|
|
|
282,600 |
|
|
|
183,262,679 |
|
1/27/08
– 2/23/08
|
|
|
257,800 |
|
|
$ |
32.13 |
|
|
|
257,800 |
|
|
|
174,979,872 |
|
2/24/08
– 3/29/08
|
|
|
164,300 |
|
|
$ |
29.77 |
|
|
|
164,300 |
|
|
|
170,089,128 |
|
Total
|
|
|
704,700 |
|
|
|
|
|
|
|
704,700 |
|
|
|
|
|
(1) No
shares were purchased outside of a publicly announced plan or
program.
The
Corporation repurchases shares under previously announced plans authorized by
the Board as follows:
·
|
Plan
announced November 9, 2007, providing share repurchase authorization of
$200,000,000 with no specific expiration
date.
|
·
|
No
repurchase plans expired or were terminated during the first quarter of
2008, nor do any plans exist under which the Corporation does not intend
to make further purchases.
|
Item
5. Other Information
Effective
as of July 2, 2007, David C. Burdakin, Executive Vice President, HNI
Corporation, resigned.
Item
6. Exhibits
See
Exhibit Index.
SIGNATURES
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
|
HNI
Corporation |
|
|
|
|
|
Dated:
April 30, 2008
|
By:
|
/s/ Stan
A. Askren |
|
|
|
Stan
A. Askren |
|
|
|
Chairman,
President and Chief Executive Officer and |
|
|
|
Acting
Chief Financial Officer |
|
|
EXHIBIT
INDEX
|
(31.1)
|
Certification
of the CEO and 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
|