r10q2q2009.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 July 4, 2009.
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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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|
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 NO
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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 the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer X Accelerated
filer
Non-accelerated
filer
(Do not check if a smaller reporting company)
Smaller
reporting company
|
|
|
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.
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Class
Common
Shares, $1 Par Value
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Outstanding
at July 4, 2009
44,985,590
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HNI
Corporation and SUBSIDIARIES
|
|
|
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 July
4, 2009, and January 3, 2009
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3
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Condensed
Consolidated Statements of Income Three
Months Ended July 4, 2009, and June 28, 2008
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5
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Condensed
Consolidated Statements of Income Six
Months Ended July 24, 2009, and June 28, 2008
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6
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Condensed
Consolidated Statements of Cash Flows Six
Months Ended July 4, 2009, and June 28, 2008
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7
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Notes
to Condensed Consolidated Financial Statements
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8
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Item
2. Management's Discussion and Analysis
of Financial
Condition and Results of Operations.
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19
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Item
3. Quantitative and Qualitative Disclosures About
Market Risk.
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25
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Item
4. Controls and Procedures.
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25
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PART
II. OTHER INFORMATION
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Item
1. Legal Proceedings.
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26
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Item
1A. Risk Factors.
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26
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Item
2. Unregistered Sales of Equity Securities and Use
of Proceeds.
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26
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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.
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26
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Item
5. Other Information – None.
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-
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Item
6. Exhibits.
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27
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SIGNATURES
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28
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EXHIBIT
INDEX
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29
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PART
I. FINANCIAL INFORMATION
Item
1. Financial Statements
(Unaudited).
HNI
Corporation and SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
July
4,
2009
(Unaudited)
|
|
|
Jan.
3,
2009
|
|
ASSETS
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
19,625 |
|
|
$ |
39,538 |
|
Short-term
investments
|
|
|
6,061 |
|
|
|
9,750 |
|
Receivables
|
|
|
173,503 |
|
|
|
238,327 |
|
Inventories
(Note C)
|
|
|
75,075 |
|
|
|
84,290 |
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Deferred
income taxes
|
|
|
17,309 |
|
|
|
16,313 |
|
Prepaid
expenses and other current assets
|
|
|
35,626 |
|
|
|
29,623 |
|
Total
Current Assets
|
|
|
327,199 |
|
|
|
417,841 |
|
|
|
|
|
|
|
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PROPERTY,
PLANT, AND EQUIPMENT, at cost
|
|
|
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Land
and land improvements
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|
23,693 |
|
|
|
23,753 |
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Buildings
|
|
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280,501 |
|
|
|
277,898 |
|
Machinery
and equipment
|
|
|
515,685 |
|
|
|
525,996 |
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Construction
in progress
|
|
|
6,784 |
|
|
|
21,738 |
|
|
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|
826,663 |
|
|
|
849,385 |
|
Less
accumulated depreciation
|
|
|
541,954 |
|
|
|
533,779 |
|
|
|
|
|
|
|
|
|
|
Net
Property, Plant, and Equipment
|
|
|
284,709 |
|
|
|
315,606 |
|
|
|
|
|
|
|
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GOODWILL
|
|
|
268,265 |
|
|
|
268,392 |
|
|
|
|
|
|
|
|
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OTHER
ASSETS
|
|
|
138,923 |
|
|
|
163,790 |
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$ |
1,019,096 |
|
|
$ |
1,165,629 |
|
|
|
|
|
|
|
|
|
|
See
accompanying Notes to Condensed Consolidated Financial
Statements.
HNI
Corporation and SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
July
4,
2009
(Unaudited)
|
|
|
Jan.
3,
2009
(As
Adjusted)
|
|
LIABILITIES
AND EQUITY
|
|
(In
thousands, except share and per share value data)
|
|
|
|
|
|
|
|
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CURRENT
LIABILITIES
|
|
|
|
|
|
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Accounts
payable and accrued expenses
|
|
$ |
258,405 |
|
|
$ |
313,431 |
|
Note
payable and current maturities of long-term
debt
and capital lease obligations
|
|
|
40,137 |
|
|
|
54,494 |
|
Current
maturities of other long-term obligations
|
|
|
390 |
|
|
|
5,700 |
|
Total
Current Liabilities
|
|
|
298,932 |
|
|
|
373,625 |
|
|
|
|
|
|
|
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LONG-TERM
DEBT
|
|
|
213,800 |
|
|
|
267,300 |
|
|
|
|
|
|
|
|
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|
CAPITAL
LEASE OBLIGATIONS
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|
|
2 |
|
|
|
43 |
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|
|
|
|
|
|
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OTHER
LONG-TERM LIABILITIES
|
|
|
51,470 |
|
|
|
50,399 |
|
|
|
|
|
|
|
|
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|
DEFERRED
INCOME TAXES
|
|
|
27,999 |
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|
|
25,271 |
|
|
|
|
|
|
|
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EQUITY
|
|
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|
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|
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Parent
Company shareholders’ equity:
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|
|
|
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|
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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 -
|
|
|
44,986 |
|
|
|
44,324 |
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July
4, 2009 – 44,985,590 shares;
|
|
|
|
|
|
|
|
|
January
3, 2009 – 44,324,409 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in capital
|
|
|
15,536 |
|
|
|
6,037 |
|
Retained
earnings
|
|
|
367,793 |
|
|
|
400,379 |
|
Accumulated
other comprehensive income
|
|
|
(1,614 |
) |
|
|
(1,907 |
) |
Total
Parent Company shareholders' equity
|
|
|
426,701 |
|
|
|
448,833 |
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest
|
|
|
192 |
|
|
|
158 |
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
|
426,893 |
|
|
|
448,991 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Equity
|
|
$ |
1,019,096 |
|
|
$ |
1,165,629 |
|
|
|
|
|
|
|
|
|
|
See
accompanying Notes to Condensed Consolidated Financial
Statements.
HNI
Corporation and SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
|
Three
Months Ended
|
|
|
July
4,
2009
|
|
|
June
28,
2008
(As
Adjusted)
|
|
|
(In
thousands, except share and per share data)
|
|
|
|
|
Net
sales
|
|
$ |
382,990 |
|
|
$ |
613,114 |
|
Cost
of sales
|
|
|
253,509 |
|
|
|
403,671 |
|
Gross
profit
|
|
|
129,481 |
|
|
|
209,443 |
|
Selling
and administrative expenses
|
|
|
124,766 |
|
|
|
182,673 |
|
Restructuring
and impairment
|
|
|
3,878 |
|
|
|
2,029 |
|
Operating
income (loss)
|
|
|
837 |
|
|
|
24,741 |
|
Interest
income
|
|
|
125 |
|
|
|
175 |
|
Interest
expense
|
|
|
3,049 |
|
|
|
4,359 |
|
Earnings
(loss) before income taxes
|
|
|
(2,087 |
) |
|
|
20,557 |
|
Income
taxes
|
|
|
(695 |
) |
|
|
7,095 |
|
Net
income (loss)
|
|
|
(1,392 |
) |
|
|
13,462 |
|
Less:
Net income (loss) attributable to the noncontrolling
interest
|
|
|
5 |
|
|
|
(7 |
) |
Net
income (loss) attributable to Parent Company
|
|
$ |
(1,397 |
) |
|
$ |
13,469 |
|
|
|
|
|
|
|
|
|
|
Net
income (loss) attributable to Parent Company per common share –
basic
|
|
$ |
(0.03 |
) |
|
$ |
0.30 |
|
Average
number of common shares outstanding – basic
|
|
|
44,894,656 |
|
|
|
44,233,402 |
|
Net
income (loss) attributable to Parent Company per common share –
diluted
|
|
$ |
(0.03 |
) |
|
$ |
0.30 |
|
Average
number of common shares outstanding – diluted
|
|
|
44,894,656 |
|
|
|
44,370,451 |
|
Cash
dividends per common share
|
|
$ |
0.215 |
|
|
$ |
0.215 |
|
See
accompanying Notes to Condensed Consolidated Financial
Statements.
|
HNI
Corporation and SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
Six
Months Ended
|
|
July
4,
2009
|
|
|
June
28,
2008
(As
Adjusted)
|
|
(In
thousands, except share and per share data)
|
|
|
|
Net
sales
|
$ |
788,656 |
|
|
$ |
1,176,497 |
|
Cost
of sales
|
|
534,440 |
|
|
|
783,016 |
|
Gross
profit
|
|
254,216 |
|
|
|
393,481 |
|
Selling
and administrative expenses
|
|
261,023 |
|
|
|
355,228 |
|
Restructuring
and impairment
|
|
8,963 |
|
|
|
2,847 |
|
Operating
income (loss)
|
|
(15,770 |
) |
|
|
35,406 |
|
Interest
income
|
|
260 |
|
|
|
638 |
|
Interest
expense
|
|
6,247 |
|
|
|
8,236 |
|
Earnings
(loss) before income taxes
|
|
(21,757 |
) |
|
|
27,808 |
|
Income
taxes
|
|
(8,497 |
) |
|
|
10,275 |
|
Net
income (loss)
|
|
(13,260 |
) |
|
|
17,533 |
|
Less:
Net income (loss) attributable to the noncontrolling
interest
|
|
23 |
|
|
|
87 |
|
Net
income (loss) attributable to Parent Company
|
$ |
( 13,283 |
) |
|
$ |
17,446 |
|
|
|
|
|
|
|
|
|
Net
income (loss) attributable to Parent Company per common share –
basic
|
$ |
(0.30 |
) |
|
$ |
0.39 |
|
Average
number of common shares outstanding – basic
|
|
44,753,368 |
|
|
|
44,385,400 |
|
Net
income (loss) attributable to Parent Company per common share –
diluted
|
$ |
(0.30 |
) |
|
$ |
0.39 |
|
Average
number of common shares outstanding – diluted
|
|
44,753,368 |
|
|
|
44,541,467 |
|
Cash
dividends per common share
|
$ |
0.43 |
|
|
$ |
0.43 |
|
See
accompanying Notes to Condensed Consolidated Financial
Statements.
|
HNI
Corporation and SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
Six
Months Ended
|
|
|
|
July
4, 2009
|
|
|
June
28, 2008
|
|
|
|
(In
thousands)
|
|
Net
Cash Flows From (To) Operating Activities:
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
( 13,283 |
) |
|
$ |
17,446 |
|
Noncash
items included in net income:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
37,782 |
|
|
|
34,566 |
|
Other
postretirement and post employment
benefits
|
|
|
924 |
|
|
|
754 |
|
Stock-based
compensation
|
|
|
1,859 |
|
|
|
952 |
|
Excess
tax benefits from stock compensation
|
|
|
- |
|
|
|
(11 |
) |
Deferred
income taxes
|
|
|
1,307 |
|
|
|
379 |
|
(Gain)/Loss
on sale, retirement and impairment of
long-lived
assets and intangibles
|
|
|
118 |
|
|
|
2,131 |
|
Stock
issued to retirement plan
|
|
|
6,565 |
|
|
|
6,592 |
|
Other
– net
|
|
|
266 |
|
|
|
1,202 |
|
Net
increase (decrease) in operating
assets
and liabilities
|
|
|
18,683 |
|
|
|
(953 |
) |
Increase
(decrease) in other liabilities
|
|
|
(4,775 |
) |
|
|
(2,863 |
) |
Net
cash flows from (to) operating activities
|
|
|
49,446 |
|
|
|
60,195 |
|
|
|
|
|
|
|
|
|
|
Net
Cash Flows From (To) Investing Activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(6,958 |
) |
|
|
(35,939 |
) |
Proceeds
from sale of property, plant and equipment
|
|
|
1,938 |
|
|
|
638 |
|
Acquisition
spending, net of cash acquired
|
|
|
(500 |
) |
|
|
(75,330 |
) |
Capitalized
software
|
|
|
(795 |
) |
|
|
- |
|
Short-term
investments – net
|
|
|
- |
|
|
|
(250 |
) |
Purchase
of long-term investments
|
|
|
(2,810 |
) |
|
|
(8,098 |
) |
Sales
or maturities of long-term investments
|
|
|
26,601 |
|
|
|
10,608 |
|
Net
cash flows from (to) investing activities
|
|
|
17,476 |
|
|
|
(108,371 |
) |
|
|
|
|
|
|
|
|
|
Net
Cash Flows From (To) Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds
from sales of HNI Corporation
common
stock
|
|
|
1,265 |
|
|
|
2,327 |
|
Purchase
of HNI Corporation common stock
|
|
|
- |
|
|
|
(28,553 |
) |
Excess
tax benefits from stock compensation
|
|
|
- |
|
|
|
11 |
|
Proceeds
from long-term debt
|
|
|
77,000 |
|
|
|
214,000 |
|
Payments
of note and long-term debt and other
financing
|
|
|
(145,797 |
) |
|
|
(131,389 |
) |
Dividends
paid
|
|
|
(19,303 |
) |
|
|
(19,073 |
) |
Net
cash flows from (to) financing activities
|
|
|
(86,835 |
) |
|
|
37,323 |
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and
cash
equivalents
|
|
|
(19,913 |
) |
|
|
(10,853 |
) |
Cash
and cash equivalents at beginning of period
|
|
|
39,538 |
|
|
|
33,881 |
|
Cash
and cash equivalents at end of period
|
|
$ |
19,625 |
|
|
$ |
23,028 |
|
|
|
See
accompanying Notes to Condensed Consolidated Financial
Statements.
|
|
HNI
Corporation and SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 4,
2009
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 January 3, 2009 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 and six-month periods ended July 4, 2009 are not necessarily
indicative of the results that may be expected for the year ending January 2,
2010. 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 January 3, 2009.
Note B.
Stock-Based Compensation
The
Corporation accounts for stock-based compensation in accordance with 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 and six
months ended July 4, 2009, and June 28, 2008, the Corporation recognized $1.1
million and $1.9 million, and $0.7 million and $1.0 million, respectively, of
stock-based compensation expense for the cost of stock options and time-based
restricted stock units issued under the HNI Corporation 2007 Stock-Based
Compensation Plan and shares issued under the HNI Corporation 2002 Members'
Stock Purchase Plan.
At July
4, 2009, there was $8.1 million of unrecognized compensation cost related to
nonvested stock-based compensation awards, which the Corporation expects to
recognize over a weighted-average remaining requisite service period of 1.4
years.
Note
C. Inventories
The
Corporation values its inventory at the lower of cost or market with
approximately 85% valued by the last-in, first-out ("LIFO") method.
(In
thousands)
|
|
July
4, 2009
(Unaudited)
|
|
|
Jan.
3, 2009
|
|
Finished
products
|
|
$ |
58,789 |
|
|
$ |
51,807 |
|
Materials
and work in process
|
|
|
43,958 |
|
|
|
60,155 |
|
LIFO
allowance
|
|
|
(27,672 |
) |
|
|
(27,672 |
) |
|
|
$ |
75,075 |
|
|
$ |
84,290 |
|
Note
D. Comprehensive Income and Shareholders' Equity
The
following table reconciles net income to comprehensive income attributable to
HNI Corporation:
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
(In
thousands)
|
|
July
4,
2009
|
|
|
June
28,
2008
|
|
|
July
4,
2009
|
|
|
June
28,
2008
|
|
Net
income (loss)
|
|
$ |
(1,392 |
) |
|
$ |
13,462 |
|
|
$ |
(13,260 |
) |
|
$ |
17,533 |
|
Other
comprehensive income, net of income tax as applicable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustments
|
|
|
(10 |
) |
|
|
420 |
|
|
|
(101 |
) |
|
|
1,215 |
|
Change
in unrealized gains (losses) on
marketable
securities
|
|
|
267 |
|
|
|
(50 |
) |
|
|
134 |
|
|
|
(203 |
) |
Change
in pension and postretirement
liability
|
|
|
79 |
|
|
|
79 |
|
|
|
158 |
|
|
|
158 |
|
Change
in derivative financial instruments
|
|
|
113 |
|
|
|
(132 |
) |
|
|
102 |
|
|
|
(132 |
) |
Comprehensive
income (loss)
|
|
|
(943 |
) |
|
|
13,779 |
|
|
|
(12,967 |
) |
|
|
18,571 |
|
Comprehensive
income (loss) attributable to
noncontrolling
interest
|
|
|
5 |
|
|
|
(7 |
) |
|
|
23 |
|
|
|
87 |
|
Comprehensive
income (loss) attributable to
HNI
Corporation
|
|
$ |
(948 |
) |
|
$ |
13,786 |
|
|
$ |
(12,990 |
) |
|
$ |
18,484 |
|
The
following table summarizes the components of accumulated other comprehensive
loss and the changes in accumulated other comprehensive loss, net of tax as
applicable for the six months ended July 4, 2009:
(in
thousands)
|
|
Foreign
Currency Translation Adjustment
|
|
|
Unrealized
Gains (Losses) on Marketable Securities
|
|
|
Pension
Postretirement Liability
|
|
|
Derivative
Financial Instruments
|
|
|
Accumulated
Other Comprehensive Loss
|
|
Balance
at January 3, 2009
|
|
$ |
3,620 |
|
|
$ |
(134 |
) |
|
$ |
(3,455 |
) |
|
$ |
(1,938 |
) |
|
$ |
(1,907 |
) |
Year-to
date change
|
|
|
(101 |
) |
|
|
134 |
|
|
|
158 |
|
|
|
102 |
|
|
|
293 |
|
Balance
at
July
4, 2009
|
|
$ |
3,519 |
|
|
|
- |
|
|
$ |
(3,297 |
) |
|
$ |
(1,836 |
) |
|
$ |
(1,614 |
) |
For the
six months ended July 4, 2009, the Corporation did not repurchase any of its
common stock. As of July 4, 2009, $163.6 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
|
|
|
Six Months Ended
|
|
(In
thousands, except per share data)
|
|
July
4,
2009
|
|
|
June
28,
2008
|
|
|
July
4,
2009
|
|
|
June
28,
2008
|
|
Numerators:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator
for both basic and diluted EPS attributable to Parent Company net income
(loss)
|
|
$ |
(1,397 |
) |
|
$ |
13,469 |
|
|
$ |
(13,283 |
) |
|
|
17,446 |
|
Denominators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
for basic EPS weighted-average common shares outstanding
|
|
|
44,895 |
|
|
|
44,233 |
|
|
|
44,753 |
|
|
|
44,385 |
|
Potentially
dilutive shares from stock-based compensation plans
|
|
|
- |
|
|
|
137 |
|
|
|
- |
|
|
|
156 |
|
Denominator
for diluted EPS
|
|
|
44,895 |
|
|
|
44,370 |
|
|
|
44,753 |
|
|
|
44,541 |
|
Earnings
per share – basic
|
|
$ |
(0.03 |
) |
|
$ |
0.30 |
|
|
$ |
(0.30 |
) |
|
$ |
0.39 |
|
Earnings
per share – diluted
|
|
$ |
(0.03 |
) |
|
$ |
0.30 |
|
|
$ |
(0.30 |
) |
|
$ |
0.39 |
|
None of
the outstanding stock options or restricted stock units was included in the
three-month and six-month computation of diluted EPS at July 4, 2009, as all
would be anti-dilutive due to the current period loss. Certain
exercisable and non-exercisable stock options totaling 1,186,428 and 1,166,602
were not included in the computation of diluted EPS at June 28, 2008 for the
three-month and six-month periods, respectively, because their inclusion would
have been anti-dilutive.
Note
F. Restructuring Reserve and Plant Shutdowns
As a
result of challenging market conditions and the Corporation's ongoing business
simplification and cost reduction strategies, management made the decision to
close office furniture manufacturing facilities located in South Gate,
California and Louisburg, North Carolina and consolidate production into
existing office furniture manufacturing facilities. In connection
with the shutdown of the Louisburg facility, the Corporation recorded $0.8
million of severance costs for approximately 90 members during the quarter ended
July 4, 2009. In connection with the shutdown of the South Gate
facility, the Corporation recorded $2.9 million of charges during the second
quarter, which included $1.2 million of accelerated depreciation of machinery
and equipment recorded in cost of sales and $1.7 million of other costs, which
were recorded as restructuring costs. The Corporation had previously
recorded $3.0 million of severance costs for approximately 250 members during
the first quarter in connection with the shutdown of the South Gate
facility. The closure and consolidation of both facilities will be
substantially complete by the end of 2009.
The
Corporation's hearth product segment disposed and closed several locations
during the quarter ended July 4, 2009. The Corporation recorded $1.5
million of charges during the second quarter, which included $0.2 million of
accelerated depreciation recorded in cost of sales and $1.3 million of other
costs which were recorded as restructuring costs.
The
following is a summary of changes in restructuring accruals during the six
months ended July 4, 2009. This summary does not include accelerated
depreciation of $1.3 million recorded during the first quarter of 2009 as this
item was not accounted for through the restructuring accrual on the
Corporation's Condensed Consolidated Balance Sheets but is included in the
"Restructuring and impairment" line item in the Corporation's Condensed
Consolidated Statements of Income.
(In
thousands)
|
|
Severance
|
|
|
Facility
Exit Costs & Other
|
|
|
Total
|
|
Balance
as of January 3, 2009
|
|
$ |
155 |
|
|
$ |
224 |
|
|
$ |
379 |
|
Restructuring
charges
|
|
|
4,153 |
|
|
|
2,845 |
|
|
|
6,998 |
|
Cash
payments
|
|
|
(1,809 |
) |
|
|
(1,767 |
) |
|
|
(3,576 |
) |
Balance
as of July 4, 2009
|
|
$ |
2,499 |
|
|
$ |
1,302 |
|
|
$ |
3,801 |
|
The
Corporation entered into an agreement during the quarter ended July 4, 2009 to
sell a hearth distribution location and recorded $0.6 million of goodwill
impairment charges, included in the "Restructuring and impairment" line item in
the Corporation's Condensed Consolidated Statements of Income, to reduce the
assets being held for sale to fair market value.
Note G.
Goodwill and Other Intangible Assets
The table
below summarizes amortizable definite-lived intangible assets as of July 4, 2009
and January 3, 2009, which are reflected in the "Other Assets" line item in the
Corporation's Condensed Consolidated Balance Sheets:
(In
thousands)
|
|
July
4, 2009
|
|
|
Jan.
3, 2009
|
|
Patents
|
|
$ |
19,325 |
|
|
$ |
19,325 |
|
Customer
relationships and other
|
|
|
115,664 |
|
|
|
115,664 |
|
Less: accumulated
amortization
|
|
|
60,996 |
|
|
|
56,098 |
|
|
|
$ |
73,993 |
|
|
$ |
78,891 |
|
Aggregate
amortization expense for the three and six months ended July 4, 2009 and June
28, 2008 was $2.6 million and $4.9 million, and $2.7 million and $4.9 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)
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
Amortization
Expense
|
|
$ |
10.0 |
|
|
$ |
8.6 |
|
|
$ |
7.2 |
|
|
$ |
6.2 |
|
|
$ |
5.8 |
|
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
$60.6 million. The trademarks are deemed to have indefinite useful
lives because they are expected to generate cash flows
indefinitely. The Corporation determines the fair value of indefinite
lives trade names on an annual basis during the fourth quarter or whenever
indication of impairment exists. The Corporation concluded that there
was not a need for an interim assessment in accordance with criteria in
paragraph 8 of FAS No. 144 as performance is in line with management’s
expectations.
The
changes in the carrying amount of goodwill since January 3, 2009, are as follows
by reporting segment:
(In
thousands)
|
|
Office
Furniture
|
|
|
Hearth
Products
|
|
|
Total
|
|
Balance
as of January 3, 2009
|
|
$ |
101,339 |
|
|
$ |
167,053 |
|
|
$ |
268,392 |
|
Goodwill
increase during period
|
|
|
- |
|
|
|
500 |
|
|
|
500 |
|
Goodwill
decrease during period
|
|
|
- |
|
|
|
(627 |
) |
|
|
(627 |
) |
Balance
as of July 4, 2009
|
|
$ |
101,339 |
|
|
$ |
166,926 |
|
|
$ |
268,265 |
|
In
accordance with SFAS No. 142 "Goodwill and Other Intangible Assets" ("SFAS No.
142"), 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 method. This method employs assumptions that are
market participant based. The increase in the hearth segment goodwill
is for contingent consideration payments related to a previous
acquisition.
During
the second quarter of fiscal 2009, the Corporation entered into an agreement to
sell a hearth distribution location, included in the Hearth & Home
Technologies reporting unit. The Corporation determined the
fair value of goodwill associated with this location and recorded an impairment
charge of $0.6 million, included in the "Restructuring and impairment" line item
in the Corporation's Condensed Consolidated Statements of Income.
As a
result, management reviewed the valuation of the remaining Hearth & Home
Technologies reporting unit, excluding the cash flows associated with the
location discussed above. The Corporation's analysis of this
reporting unit concluded the fair value exceeded the carrying value by
approximately 15% and as such, no impairment charges during second quarter were
necessary. For all other reporting units which continue to perform in
line with management’s expectations, the Corporation concluded there was not a
need for an interim assessment in accordance with criteria in paragraph 28 of
FAS No. 142.
Due to
the ongoing uncertainty in market conditions, which may continue to negatively
impact the Corporation's operating results and overall market value, management
will continue to monitor and evaluate the carrying value of goodwill and
indefinite-lived trade names, particularly with respect to the Hearth & Home
Technologies reporting unit.
Note
H. 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:
|
|
Six
Months Ended
|
|
(In
thousands)
|
|
July
4, 2009
|
|
|
June
28, 2008
|
|
Balance
at beginning of period
|
|
$ |
13,948 |
|
|
$ |
12,123 |
|
Accrual
assumed from acquisition
|
|
|
- |
|
|
|
250 |
|
Accruals
for warranties issued during period
|
|
|
7,093 |
|
|
|
9,757 |
|
Adjustments
related to pre-existing warranties
|
|
|
13 |
|
|
|
927 |
|
Settlements
made during the period
|
|
|
(7,790 |
) |
|
|
(9,981 |
) |
Balance
at end of period
|
|
$ |
13,264 |
|
|
$ |
13,076 |
|
Note
I. 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:
|
|
Six Months
Ended
|
|
(In
thousands)
|
|
July
4, 2009
|
|
|
June
28, 2008
|
|
Service
cost
|
|
$ |
195 |
|
|
$ |
198 |
|
Interest
cost
|
|
|
480 |
|
|
|
481 |
|
Expected
return on plan assets
|
|
|
- |
|
|
|
(179 |
) |
Amortization
of transition obligation
|
|
|
254 |
|
|
|
254 |
|
Amortization
of (gain)/loss
|
|
|
(5 |
) |
|
|
- |
|
Net
periodic benefit cost
|
|
$ |
924 |
|
|
$ |
754 |
|
The
provision for income taxes in the second quarter of fiscal 2009 reflects an
actual effective tax rate of 33.3 percent, compared to an estimated annual tax
rate of 34.5 percent for the second quarter of fiscal 2008 and actual tax rate
for the full year 2008 of 34.2 percent. A discrete calculation was
used to report the 2009 second quarter tax provision rather than an estimated
annual tax rate as uncertainty in the full year outlook produces significant
variability in the estimated annual effective tax rate.
Note
K. Derivative Financial Instruments
The
Corporation uses derivative financial instruments to reduce its exposure to
adverse fluctuations in interest rates. In accordance with SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133") and related amendments and interpretations, 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 London Interbank Offered Rate ("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 on May 27, 2011.
The
aggregate fair market value of the interest rate swap as of July 4, 2009 was a
liability of $2.9 million, of which $1.7 million is included in current
liabilities and $1.2 million is included in long-term liabilities in the
Corporation's Condensed Consolidated Balance Sheet as of July 4,
2009. For the six-month period ended July 4, 2009, the Corporation
recorded a deferred net loss of $644,000 in other comprehensive income and
reclassified $807,000 from other comprehensive income to current period earnings
as interest expense in its Condensed Consolidated Statement of
Income. As of July 4, 2009, $1.1 million of deferred net losses, net
of tax, included in equity ("Accumulated other comprehensive income (loss)" in
the Corporation's Condensed Consolidated Balance Sheets) related to this
interest rate swap, are expected to be reclassified to current earnings
(“Interest expense” in the Corporation's Condensed Consolidated Statement of
Income) over the next twelve months.
Note
L. Fair Value Measurements
On
December 30, 2007, the beginning of its 2008 fiscal year, the Corporation
adopted SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157") which provides
enhanced guidance for using fair value to measure assets and liabilities for
financial assets and liabilities. 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 adopted the provisions of SFAS No.
157 with regard to its nonfinancial assets and liabilities on January 4, 2009 in
accordance with Financial Accounting Standards Board Staff Position
157-2. The adoption of SFAS No. 157 did not have a material impact on
the Corporation's financial statements.
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 six months ended July 4, 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)
|
|
Investment
in target funds
|
|
$ |
5,811 |
|
|
$ |
- |
|
|
$ |
5,811 |
|
|
$ |
- |
|
Derivative
financial instrument
|
|
$ |
(2,943 |
) |
|
$ |
- |
|
|
$ |
(2,943 |
) |
|
$ |
- |
|
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 |
) |
|
$ |
- |
|
The fair
value of the Corporation's outstanding variable rate long-term debt obligations
at July 4, 2009 and January 3, 2009, the end of the Corporation's fiscal year,
approximates the carrying value. The fair value of the Corporation's
outstanding fixed rate long-term debt obligations is estimated to be $115
million at July 4, 2009 and $137 million at January 3, 2009, below the carrying
value of $150 million.
Note
M. Commitments and Contingencies
The
Corporation utilizes letters of credit in the amount of $20.9 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, 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.
Note
N. New Accounting Standards
In
December 2007, the Financial Accounting Standards Board (the "FASB") issued SFAS
No. 141 (Revised), "Business Combinations" ("SFAS No. 141(R)"), replacing SFAS
No. 141, "Business Combinations". SFAS No. 141(R) retains the
fundamental requirements of SFAS 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. The Corporation will apply the provisions of this
statement prospectively to business combinations for which the acquisition date
is on or after January 3, 2009 and can only assess the impact of the standard
once an acquisition is consummated.
In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51" ("SFAS No.
160"). SFAS No. 160 requires a noncontrolling interest in a
subsidiary 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 provisions of SFAS No.
160 in the first quarter of 2009. As a result of the adoption, the
Corporation has reported noncontrolling interests as a component of equity in
its Condensed Consolidated Balance Sheets and the net income or loss
attributable to noncontrolling interests has been separately identified in its
Condensed Consolidated Statements of Income. The prior periods
presented have also been reclassified to conform to the current classification
required by SFAS No. 160.
In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities – an amendment of FASB Statement No. 133" ("SFAS No.
161"). SFAS No. 161 expands the disclosure requirements of SFAS No.
133 with the intent to provide users of financial statements with an enhanced
understanding of an entity’s derivative activity. The Corporation adopted SFAS
No. 161 as of January 4, 2009 and has included related disclosures in Note K.
Derivative Financial
Instruments.
In April
2009, the FASB issued FASB Staff Position ("FSP") on FAS 107-1 and APB 28-1,
"Interim Disclosures about Fair Value of Financial Instruments" ("FSP FAS 107-1
and APB 28
1"). This
FSP requires the fair value disclosures required by SFAS No. 107 "Disclosures
about Fair Value of Financial Instruments" be included for interim reporting
periods. The Corporation adopted FSP FAS 107-1 and APB 28-1 effective
April 5, 2009. The adoption of FSP FAS 107-1 and APB 28-1 did not
have a material impact on its financial statements.
In April
2009, the FASB issued FSP on FAS 157-4, "Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly" ("FSP FAS
157-4"). FSP FAS 157-5 provides guidance on determining when the
trading volume and activity for an asset or liability has significantly
decreased, which may indicate an inactive market, and on measuring the fair
value of an asset or liability in inactive markets. The Corporation
adopted FSP FAS 157-4 effective April 5, 2009. The adoption of FSP
FAS 157-4 did not have a material impact on the financial
statements.
In May
2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS No.
165"). SFAS No. 165 establishes general standards of accounting for
and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. The
Corporation adopted SFAS No. 165 as of July 4, 2009. The Corporation
has performed an evaluation of subsequent events through August 11, 2009, which
is the date the financial statements were issued.
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 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 manufactured 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 cost of the Corporation's corporate operations,
interest income, and interest expense. The decrease in unallocated
corporate expenses compared to prior year is due primarily to decreased interest
expense. 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-
and six-months periods ended July 4, 2009, and June 28, 2008, is as
follows:
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
(In
thousands)
|
|
July
4,
2009
|
|
|
June
28,
2008
|
|
|
July
4,
2009
|
|
|
June
28,
2008
|
|
Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
Furniture
|
|
$ |
323,962 |
|
|
$ |
514,521 |
|
|
$ |
661,834 |
|
|
$ |
980,546 |
|
Hearth
Products
|
|
|
59,028 |
|
|
|
98,593 |
|
|
|
126,822 |
|
|
|
195,951 |
|
|
|
$ |
382,990 |
|
|
$ |
613,114 |
|
|
$ |
788,656 |
|
|
$ |
1,176,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
furniture (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
before restructuring charges
|
|
$ |
19,444 |
|
|
$ |
32,194 |
|
|
$ |
22,953 |
|
|
$ |
51,744 |
|
Restructuring
and impairment charges
|
|
|
(2,508 |
) |
|
|
(2,072 |
) |
|
|
(5,497 |
) |
|
|
(2,871 |
) |
Office
furniture – net
|
|
|
16,936 |
|
|
|
30,122 |
|
|
|
17,456 |
|
|
|
48,873 |
|
Hearth
products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
before restructuring charges
|
|
|
(7,685 |
) |
|
|
1,542 |
|
|
|
(17,036 |
) |
|
|
(1,305 |
) |
Restructuring
and impairment charges
|
|
|
(1,370 |
) |
|
|
43 |
|
|
|
(3,466 |
) |
|
|
24 |
|
Hearth
products – net
|
|
|
(9,055 |
) |
|
|
1,585 |
|
|
|
(20,502 |
) |
|
|
(1,281 |
) |
Total
operating profit
|
|
|
7,881 |
|
|
|
31,707 |
|
|
|
(3,046 |
) |
|
|
47,592 |
|
Unallocated
corporate expense
|
|
|
(9,975 |
) |
|
|
(11,140 |
) |
|
|
(18,745 |
) |
|
|
(19,918 |
) |
Income
(loss) before income taxes
|
|
$ |
(2,094 |
) |
|
$ |
20,567 |
|
|
$ |
(21,791 |
) |
|
$ |
27,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
& Amortization Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
furniture
|
|
$ |
13,734 |
|
|
$ |
12,571 |
|
|
$ |
26,899 |
|
|
$ |
24,647 |
|
Hearth
products
|
|
|
3,866 |
|
|
|
3,848 |
|
|
|
8,880 |
|
|
|
7,694 |
|
General
corporate
|
|
|
942 |
|
|
|
1,125 |
|
|
|
2,003 |
|
|
|
2,224 |
|
|
|
$ |
18,542 |
|
|
$ |
17,544 |
|
|
$ |
37,782 |
|
|
$ |
34,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
furniture
|
|
$ |
2,819 |
|
|
$ |
15,936 |
|
|
$ |
5,729 |
|
|
$ |
29,848 |
|
Hearth
products
|
|
|
231 |
|
|
|
2,343 |
|
|
|
1,700 |
|
|
|
5,187 |
|
General
corporate
|
|
|
87 |
|
|
|
36 |
|
|
|
324 |
|
|
|
904 |
|
|
|
$ |
3,137 |
|
|
$ |
18,315 |
|
|
$ |
7,753 |
|
|
$ |
35,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
July
4,
2009
|
|
|
As
of
June
28,
2008
|
|
Identifiable
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
furniture
|
|
|
|
|
|
|
|
|
|
$ |
633,693 |
|
|
$ |
801,532 |
|
Hearth
products
|
|
|
|
|
|
|
|
|
|
|
308,437 |
|
|
|
333,406 |
|
General
corporate
|
|
|
|
|
|
|
|
|
|
|
76,966 |
|
|
|
108,905 |
|
|
|
|
|
|
|
|
|
|
|
$ |
1,019,096 |
|
|
$ |
1,243,843 |
|
(1) Includes
noncontrolling interest.
Item
2. Management's Discussion and Analysis of Financial Condition and
Results of
Operations
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
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 second quarter of fiscal 2009 decreased 37.5 percent to $383.0 million
as compared to the second quarter of the prior year. The decrease was
driven by large declines in both segments due to adverse market
conditions. Gross margins for the quarter decreased from prior year
levels due primarily to decreased volume. Selling and administrative
expenses decreased due to cost control initiatives, lower volume related costs
and incentive-based compensation offset partially by increased restructuring and
transition costs.
The
Corporation continues to take actions to reset its cost structure due to
challenging market conditions and pursuant to its ongoing business
simplification and cost reduction strategies. The Corporation
announced the decision to shutdown an additional office furniture manufacturing
facility and recorded $3.7 million of costs in the second quarter in connection
with this shutdown as well as previously announced shutdowns. In
addition, $1.5 million of charges related to the restructuring of hearth
operations was recorded during the second quarter.
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 by
management 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 January 3, 2009. During
the first six months of fiscal 2009, there were no material changes
in
the
accounting policies and assumptions previously disclosed. Given the
continued challenging market condition and the operating loss for the current
period, the Corporation evaluated paragraph 28 of SFAS No. 142 to determine
whether an interim triggering event existed. Refer to Note G. Goodwill and Other Intangible
Assets for further discussion.
New Accounting
Standards
For
information pertaining to the Corporation’s adoption of new accounting standards
and any resulting impact to the Corporation's financial statements, please refer
to the first paragraph of Note L. Fair Value Measurements and
the entirety of Note N. New
Accounting Standards of the Notes to the Condensed Consolidated Financial
Statements included in Part 1, Item 1 of this Quarterly Report on Form
10-Q.
Results of
Operations
The
following table presents certain key highlights from the results of operations
for the periods indicated:
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
(In
thousands)
|
|
July
4,
2009
|
|
|
June
28,
2008
|
|
|
Percent
Change
|
|
|
July
4,
2009
|
|
|
June
28,
2008
|
|
|
Percent
Change
|
|
Net
sales
|
|
$ |
382,990 |
|
|
$ |
613,114 |
|
|
|
-37.5 |
|
|
$ |
788,656 |
|
|
$ |
1,176,497 |
|
|
|
-33.0 |
|
Cost
of sales
|
|
|
253,509 |
|
|
|
403,671 |
|
|
|
-37.2 |
|
|
|
534,440 |
|
|
|
783,016 |
|
|
|
-31.7 |
|
Gross
profit
|
|
|
129,481 |
|
|
|
209,443 |
|
|
|
-38.2 |
|
|
|
254,216 |
|
|
|
393,481 |
|
|
|
-35.4 |
|
Selling
& administrative expenses
|
|
|
124,766 |
|
|
|
182,673 |
|
|
|
-31.7 |
|
|
|
261,023 |
|
|
|
355,228 |
|
|
|
-26.5 |
|
Restructuring
& impairment charges
|
|
|
3,878 |
|
|
|
2,029 |
|
|
|
91.1 |
|
|
|
8,963 |
|
|
|
2,847 |
|
|
|
214.8 |
|
Operating
income (loss)
|
|
|
837 |
|
|
|
24,741 |
|
|
|
-96.6 |
|
|
|
(15,770 |
) |
|
|
35,406 |
|
|
|
-144.5 |
|
Interest
expense, net
|
|
|
2,924 |
|
|
|
4,184 |
|
|
|
-30.1 |
|
|
|
5,987 |
|
|
|
7,598 |
|
|
|
-21.2 |
|
Earnings
(loss) before income taxes
|
|
|
(2,087 |
) |
|
|
20,557 |
|
|
|
-110.2 |
|
|
|
(21,757 |
) |
|
|
27,808 |
|
|
|
-178.2 |
|
Income
taxes
|
|
|
(695 |
) |
|
|
7,095 |
|
|
|
-109.8 |
|
|
|
(8,497 |
) |
|
|
10,275 |
|
|
|
-182.7 |
|
Less: Net
income attributable to the noncontrolling interest
|
|
|
5 |
|
|
|
(7 |
) |
|
|
-171.4 |
|
|
|
23 |
|
|
|
87 |
|
|
|
-73.6 |
|
Net
income (loss) attributable to Parent Company
|
|
$ |
( 1,397 |
) |
|
$ |
13,469 |
|
|
|
-110.4 |
|
|
$ |
(
13,283 |
) |
|
$ |
17,446 |
|
|
|
-176.1 |
|
Consolidated
net sales for the second quarter of 2009 decreased 37.5 percent or $230.1
million compared to the same quarter last year due to challenging market
conditions in both the office furniture and hearth products
segments.
Gross
margins for the second quarter of 2009 decreased to 33.8 percent compared to
34.2 percent for the same quarter last year. The reduction in gross
margin was due to decreased volume offset partially by increased price
realization and cost reduction initiatives. Second quarter 2009
included $1.4 million of accelerated depreciation related to the shutdown and
consolidation of an office furniture manufacturing facility and hearth
restructuring compared to $1.5 million of accelerated depreciation and
transition costs in the same quarter last year.
As a
result of challenging market conditions and the Corporation's ongoing business
simplification and cost reduction strategies, management made the decision to
close an additional office furniture manufacturing facility located in
Louisburg, North Carolina and consolidate production into other
locations. In connection with the shutdown of the Louisburg facility,
the Corporation recorded $0.8 million of severance costs for approximately 90
members during the quarter ended July 4, 2009. In connection with the
shutdown of the South Gate office furniture manufacturing facility announced
earlier this year, the Corporation recorded $2.9 million of current period
charges, which included $1.2 million of accelerated depreciation of machinery
and equipment recorded in cost of sales and $1.7 million of other costs, which
were recorded as restructuring costs during the quarter. The
Corporation had previously recorded $3.0 million of severance costs for
approximately 250 members during the first quarter in connection with the
shutdown of the South Gate facility. The closure and consolidation of
both facilities will be substantially complete by the end of
2009. The Corporation's hearth product segment disposed and closed
several locations during the quarter ended July 4, 2009. The
Corporation recorded $1.5 million of charges, which included $0.2 million of
accelerated depreciation recorded in cost of sales and $1.3 million of other
costs which were recorded as restructuring costs during the quarter. The
Corporation anticipates additional restructuring charges of approximately $4.6
million related to the various shutdowns during the remainder of
2009.
Total
selling and administrative expenses, including restructuring charges, as a
percent of sales increased to 33.6 percent compared to 30.1 percent for the same
quarter last year due to lower volume. Actual selling and
administrative expenses decreased $56.1 million as a result of cost control
initiatives, lower volume related expenses, reduced incentive-based compensation
expense and a gain of $1.3 million on the sale of the corporate
aircraft. Second quarter 2009 included $3.9 million of restructuring
charges compared to $2.0 million in 2008.
The
Corporation experienced a net loss of $1.4 million or ($0.03) per diluted share
in the second quarter of 2009 compared to net income of $13.5 million or $0.30
per diluted share in second quarter 2008. Net interest expense
decreased $1.3 million during the quarter due to lower average interest rates
and reduced borrowing.
The
provision for income taxes in the second quarter of fiscal 2009 reflects an
actual effective tax rate of 33.3 percent, compared to an estimated annual tax
rate of 34.5 percent for the second quarter of fiscal 2008 and actual tax rate
for the full year 2008 of 34.2 percent. A discrete calculation was
used to report the second quarter tax provision rather than an estimated annual
tax rate as uncertainty in the full year outlook produces significant
variability in the estimated annual effective tax rate.
For the
first six months of 2009, consolidated net sales decreased $0.4 billion, or 33.0
percent, to $0.8 billion compared to $1.2 billion in
2008. Acquisitions added $10.2 million or 0.9 percentage points of
sales. Gross margins decreased to 32.2 percent compared to 33.4
percent for the same period last year. The operating loss was $15.8
million for the first six months of 2009 compared to income of $35.4 million for
the first six months of 2008. Earnings per share decreased to ($0.30)
per diluted share compared to $0.39 per diluted share for the same period last
year.
Office
Furniture
Second
quarter sales for the office furniture segment decreased 37.0 percent or $190.6
million to $324.0 million from $514.5 million for the same quarter last year
driven by substantial weakness
in both
the supplies-driven and contract channels of the office furniture
industry. Operating profit prior to unallocated corporate expenses
decreased $13.2 million to $16.9 million as a result of lower volume partially
offset by price realization, cost control initiatives and lower variable
compensation expense. Second quarter 2009 included $3.7 million of
restructuring costs including accelerated depreciation compared to $3.6 million
of restructuring and transition costs in second quarter 2008.
Net sales
for the first six months of 2009 decreased 32.5 percent or $318.7 million to
$661.8 million compared to $980.5 million for the same period in
2008. Acquisitions added $10.2 million or 1.0 percentage points of
sales. Operating profit decreased 64.3 percent or $31.4 million to
$17.5 million.
Hearth
Products
Second
quarter net sales for the hearth products segment decreased 40.1 percent or
$39.6 million to $59.0 million from $98.6 million for the same quarter last year
driven by significant declines in both the new construction and remodel-retrofit
channels. Operating profit prior to unallocated corporate expenses
decreased $10.6 million to a $9.1 million loss due to lower volume and higher
restructuring expenses partially offset by cost reduction initiatives and lower
incentive based compensation costs.
Net sales
for the first six months of 2009 decreased 35.5 percent or $69.1 million to
$126.8 million compared to $196.0 million for the same period in
2008. Operating profit decreased $19.2 million to a $20.5 million
loss.
Liquidity and Capital
Resources
Cash
Flow – Operating Activities
Cash
generated from operating activities for the first six months of 2009 totaled
$49.4 million compared to $60.2 million generated in the first six months of
2008. Improved working capital performance resulted in a $18.7
million source of cash in the current fiscal year compared to $1.0 million use
of cash in the prior year.
Cash
Flow – Investing Activities
Capital
expenditures including capitalized software for the first six months of fiscal
2009 were $7.8 million compared to $35.9 million in the same period of fiscal
2008 and were primarily for tooling and equipment for new
products. For the full year 2009, capital expenditures are expected
to be approximately $25 million primarily for new product development and
related tooling. The Corporation sold $21 million of long-term
investments during the quarter and used the proceeds to repay debt.
Cash
Flow – Financing Activities
During
the first six months of fiscal 2009, net borrowings under the Corporation's
revolving credit facility decreased $51 million. As of July 4, 2009,
$56.5 million of the revolving credit facility was outstanding with $6.5 million
classified as short-term. Also included in current liabilities is
$33.5 million of the $45.0 million outstanding on the Corporation's term loan as
of July 4, 2009. The Corporation expects to repay that portion of the
borrowings within the next twelve months.
The
credit agreements governing the Corporation's revolving credit facility and term
loan contain 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 respective
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 respective 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, term loan 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, term loan 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 agreements governing both the
revolving credit facility and term loan. Under both credit
agreements, 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 July 4, 2009, the Corporation was well below this ratio
and was in compliance with all of the covenants and other restrictions in the
credit agreements and note purchase agreement. The Corporation
currently expects to remain in compliance over the next twelve
months. If the Corporation’s actual results over the next twelve
months are lower than current projections, the margin by which the Corporation
is below the consolidated leverage ratio will decrease. However, even
if a 20 percent decline in expected results over the next twelve months were to
occur, the Corporation would remain in compliance with the
covenant.
The
Corporation's Board of Directors (the "Board") declared a regular quarterly cash
dividend of $0.215 per share on the Corporation's common stock on May 23, 2009,
to shareholders of record at the close of business on May 22,
2009. It was paid on June 1, 2009.
The
Corporation did not repurchase any shares of common stock during the second
quarter of 2009. For the six months ended June 28, 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 per
share. As of July 4, 2009, approximately $163.6 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 the
Corporation's financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
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 January 3,
2009. During the first six months of fiscal 2009, 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,
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.
Looking
Ahead
Although
management sees signs of stabilization in many of the Corporation's markets,
management expects weak demand to continue across its businesses during the
remainder of 2009. The Corporation will continue to reset its cost
structure to the current challenging market conditions while investing in new
products, selling initiatives and operational improvements.
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
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, 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) ability to maintain its effective tax rate and (f)
consolidation and logistical realignment initiatives; uncertainty related to the
availability of cash and credit, and the terms and interest rates on which
credit would be available, to fund operations and future growth; lower than
expected demand for the Corporation's products due to uncertain political and
economic conditions, including the current credit crisis,
slow or
negative growth rates in global and domestic economies and 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, epidemic, 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; relationships
with distribution channel partners, including the financial viability
ofdistributors and dealers; restrictions imposed by the terms of the
Corporation's revolving credit facility, term loan credit agreement 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
July 4, 2009, 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 January 3,
2009.
Item 4. Controls
and Procedures
Disclosure
controls and procedures are designed to ensure information required to be
disclosed by the Corporation in the reports 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 Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
are also designed to ensure information is accumulated and communicated to
management, including the chief executive officer and 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 chief financial officer of the Corporation carried out an evaluation
of the Corporation's disclosure controls and procedures pursuant to Exchange Act
Rules 13a – 15(e) and 15d – 15(e). As of July 4, 2009, and,
based on this evaluation, the chief executive officer and chief financial
officer have concluded these disclosure 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 Quarterly Report on 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 other than ordinary
routine litigation incidental to the business.
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 January 3, 2009.
Item
2. Unregistered Sales of Equity Securities
and Use of Proceeds
Directors
and members (i.e., employees) 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 second
quarter of 2009, the directors and members, as a group, were credited with
21,921 common stock equivalents under the Deferred Plans. The value
of each common stock equivalent, when credited, ranged from $15.80 to
$18.22.
The
Corporation did not repurchase any of its shares during the second quarter ended
July 4, 2009. As of July 4, 2009, $164 million was authorized and
available for the repurchase of shares by the Corporation.
Item
4. Submission of Matters to a Vote of Security
Holders
The
Annual Meeting of Shareholders of HNI Corporation was held on May 12, 2009, to
elect four Directors to the Board, approve an amendment to the HNI Corporation
2002 Members' Stock Purchase Plan and ratify the Audit Committee's selection of
PricewaterhouseCoopers LLP as the Corporation's independent registered public
accountant for the fiscal year ended January 2, 2010. As of March 13,
2009, the record date for the meeting, there were 44,880,734 shares of the
Corporation's common stock issued and outstanding and entitled to vote at the
meeting.
The first
proposal voted upon was the election of four Directors for a term of three years
or until their successors are elected and qualify. The four persons
nominated by the Board received the following votes and were
elected.
Name
|
|
For
|
|
|
Against
|
|
Stan
A. Askren
|
|
|
37,018,597 |
|
|
|
2,013,562 |
|
Gary
M. Christensen
|
|
|
37,478,765 |
|
|
|
1,553,394 |
|
Joseph
E. Scalzo
|
|
|
37,318,744 |
|
|
|
1,713,415 |
|
Ronald
V. Waters, III
|
|
|
37,018,100 |
|
|
|
2,014,059 |
|
Other
Directors whose term of office as a Director continued after the meeting
are: Mary H. Bell, Miguel M. Calado, Cheryl A. Francis, John A.
Halbrook, James R. Jenkins, Dennis J. Martin, Larry B. Porcellato, Abbie J.
Smith, and Brian E. Stern.
The
second proposal voted upon was the approval of an amendment to the HNI
Corporation 2002 Members' Stock Purchase Plan to increase the number of
authorized shares available for issuance under the plan. The proposal
was adopted with the following votes.
For
|
|
|
32,397,472 |
|
Against
|
|
|
2,325,269 |
|
Abstain
|
|
|
301,601 |
|
Broker
Non-Votes
|
|
|
4,007,817 |
|
The third
proposal voted upon was the ratification of the Audit Committee's selection of
PricewaterhouseCoopers LLP as the Corporation's independent registered public
accountant for the fiscal year ended January 2, 2010. The proposal
was ratified with the following votes.
For
|
|
|
38,673,205 |
|
Against
|
|
|
136,822 |
|
Abstain
|
|
|
222,132 |
|
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:
August 11, 2009
|
By:
|
/s/ Kurt
A. Tjaden |
|
|
|
Kurt
A. Tjaden |
|
|
|
Vice
President and Chief Financial Officer |
|
|
|
|
|
|
EXHIBIT INDEX
|
(10.1)
|
Form
of HNI Corporation 2007 Stock-Based Compensation Plan Stock Option Award
Agreement*
|
(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
|
*Indicates
management contract or compensatory plan.